National Treasury has proposed lowering some of the levies that FSPs will pay to the FSCA in terms of the Financial Sector and Deposit Insurance Levies Bill, to reduce the impact on small entities.
Vukile Davidson, Treasury’s chief director of financial sector policy, told Parliament’s Standing Committee on Finance on Wednesday that the adjustments were the result of engagements with the Financial Intermediaries Association of Southern Africa (FIA).
FSCA deputy commissioner Katherine Gibson said the FSCA received “strong guidance” from the FIA “that we should be accommodating the smaller entities to the extent possible”.
As a result, she said the FSCA reworked the variable components of the formulae to target an inflation-related increase for the smaller FSPs, while raising the levy cap so that the larger FSPs, such as the banks and life insurers, would pay more.
The proposal is to raise the maximum amount that all categories of FSPs can pay to the FSCA from R2 million to R2.5m.
During the meeting, Treasury announced the following changes to the formulae used to calculate the levies payable to the FSCA in terms of Schedule 2, Table B:
Category I and Category IV FSPs
- The base levy decreases by 10%, from R4 000 to R3 600
- The levy per representative/key individual decreases by 16.1%, from R620 to R520
Category II, IIA and III FSPs
- The base levy decreases by 6.25%, from R8 000 to R7 500
- The levy per representative/KI also decreases from R620 to R520
Category I or Category IV FSPs: long-term insurance sub-category A or friendly society benefits
- The base levy decreases from R4 000 to R3 600
- The representative/KI levy decreases by 10.7%, from R280 to R250
Table B included a category labelled “FSP (other)”, which will be removed.
Commenting on the revisions, the FIA said it welcomed the willingness of the regulators, specifically Treasury and the FSCA, “to engage on our submissions with regard to the draft levies Bill, and specifically our concerns around the impact of the proposed levies on smaller businesses and new entrants to the market. The proposals to the standing committee this morning are noted and welcomed. We are currently assessing the true impact of the proposals on our members.”
The revised Bill will incorporate the amendments that were proposed at last week’s meeting of the committee. These include rewording section 11 so that the regulators can grant exemptions not only on application by an individual institution but also if they identify circumstances where an institution or a category of institutions can be exempted from all or part of a levy.
Last week, the committee requested a report from Treasury on the socio-economic impact of the legislation.
Committee chairperson Mkhacani Maswanganyi said the report should not just be a narrative and suggested it include a case study of how the levies might impact a small FSP.
But Treasury’s presentation on Wednesday – as at previous committee meetings – focused on explaining why the regulators need more funding to provide investors and consumers with better protection.
By its own admission, the report was largely based on the socio-economic impact study that Treasury has previously published.
The committee adopted both Bills, with reservations from the DA.