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PostSubject: FSB ENFORCEMENT COMMITTEE UPS THE ANTE! - FAnews 7 July 2011   FSB ENFORCEMENT COMMITTEE UPS THE ANTE! - FAnews 7 July 2011 EmptyThu Jul 07, 2011 12:02 pm

The Financial Services Board (FSB) has come in for plenty of criticism in recent months. Top of the list is a deep dissatisfaction among financial services professionals with the implementation of the regulatory exams. Most welcomed the exams as a much needed step to professionalism in the industry, but few were prepared for the chaos that followed its implementation. Granted, chaos may be a trifle harsh, but as the 31 December 2011 deadline (for completion of RE I) looms industry participants are still up in arms over issues with exam study guides, exam language, ambiguous multiple choice questions, the appropriateness of exam content to various industry participants, high failure rates and exam centre capacity, among others. It appears, once again, we are struggling with an 'implement regardless of consequence' attitude from the industry watchdog…
Another of the accusations levelled at the FSB by advisers is that they're obsessed with generating revenue from financial services professionals when they should be safeguarding the industry. Many opponents of the regulatory exam have, for example, dismissed the process as an FSB money spinner! It seems their rage is misdirected, because the monetary benefit from the exam process flows to the approved examination bodies. The fee for the RE I exam was set at R900, with the FSB scooping only R20 to cover administrative, oversight and IT development costs. The FSB reminds us that the fee was calculated based on budgets submitted in 2008, which have not taken into consideration any inflation over the past three years. The good news is there's no intention to increase the fee until such time the RE II cut off date is reached, in December 2013.
How the FSB keeps the cash register ticking over...
Where does the FSB get its funding? And is there truth to the 'fleecing the intermediary' allegation? To find out we paged through the 2010 FSB Annual Report. According to the organisation's annual financial statements they 'banked' around R316.791 million from the industry over the latest year, including R265.192m from FSB Levies, R21.753m from FAIS Ombud Levies and R30.025m from PFA Levies. Additional revenues accrued thanks to fines and penalties R2.348m, inspection costs and recoveries R319 588, and legal and other cost recoveries R1.160 million.
We get a further 'feel' for the regulatory fees borne by industry participants by perusing the Government Gazette No. 33750 that deals specifically with Determination of Fees Payable to the Registrar of Financial Services Providers… It provides a comprehensive list of fees and charges in place from January 2011. An FSP licence (excluding discretionary FSP) will set you back R1,690.00, or R676.00 if the fee is payable to the FSB through a recognised representative body… This 60% discount applies to most licensing applications and amendments. But fees quickly escalate for Discretionary FSP Licences (R10,360.00) or Administrative FSP Licences (R30,560.00).
It would be impossible for us to determine the cost to an average FSP due to FSB licensing and related administrative transactions. We assume industry stakeholders could debate these charges back and forth… But apart from observing that certain administrative charges seem a trifle steep (for example, FSP name change applications (R480), additional certified copy of licence (R150) and reprinting of licence certificate (R400) we're not in a position to comment.
The enforcement committee sure to improve its contribution!
What we can say is the FSB Enforcement Committee,…
Click here to read the full article which continues on our website.
Editor’s thoughts:
The FSB has to fund its activities from the industry it represents. But if the regulator is allowed to grow unchecked we run the risk of it becoming a drag on the sector it is meant to serve. Do you think the current fee structure implemented by the FSB is fair? And how much is your practice paying away in FSB licensing and administrative fees each year? Please add your comments online, or – if you prefer a confidential rant – send it to

Kind regards,
Gareth Stokes
FAnews Online Editor
+27 11 768 2299
+27 73 373 3580
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