FINANCIAL SECTOR: OUT FOR COMMENT 

National Treasury is calling for input on:

  • two draft Bills affecting the insurance industry

  • three tax policy discussion documents, and

  • two sets of retirement reform proposals.

 

The Financial Sector Conduct Authority and Prudential Authority are calling for input on a draft standard on cybersecurity and cyber resilience.  

The Information Regulator is calling for input by 14 January 2022 on Banking Association SA's draft code of conduct intended to 'promote appropriate practices' when processing personal information under the Protection of Personal Information Act.

THE DRAFT BILLS

 

Published on 15 December for comment by 7 February 2022, the purpose of the draft Financial Sector & Deposit Insurance Levies Bill and draft Financial Sector & Deposit Insurance Levies (Administration) & Deposit Insurance Premiums Bill is to facilitate the funding of financial sector regulators, ombuds and other bodies, enabling them to 'effectively regulate the financial sector' in the best interests of financial service customers. This is according to a National Treasury media statement on the two draft Bills.

 

To that end:

 

  • the draft Financial Sector & Deposit Insurance Levies Bill proposes the establishment of a deposit insurance fund and a 'deposit insurance corporation' to administer it, while

  • the draft Financial Sector & Deposit Insurance Levies (Administration) & Deposit Insurance Premiums Bill focuses on proposals for imposing levies on supervised entities in the context of Chapter 16 (fees, levies and finances) of the 2017 Financial Services Regulation Act.

The following documents released with the two draft Bills provide more details on what is envisaged:

  • a memorandum on the objects of the draft Financial Sector & Deposit Insurance Levies Bill

  • a memorandum on the objects of the draft Financial Sector & Deposit Insurance Levies (Administration) & Deposit Insurance Premiums Bill

  • a socio-economic impact assessment of the draft Financial Sector & Deposit Insurance Levies Bill

  • a socio-economic impact assessment of the draft Financial Sector & Deposit Insurance Levies (Administration) & Deposit Insurance Premiums Bill, and

  • a document providing more insight into the proposed deposit insurance corporation'.

TAX POLICY PROPOSALS

 

Also on 15 December, National Treasury called for comment by 25 January 2022 on three tax policy discussion papers focusing on:

 

  • the most 'appropriate' tax regime for the oil and gas industry

  • a review of the design, implementation and impact of South Africa's research and development tax incentive, and

  • electronic nicotine and non-nicotine delivery systems (vaping) taxation.

According to a media statement on the papers:

 

  • one interrogates the suitability of upstream petroleum industry tax regime design given government's intention to 'create a balance between attracting investment, generating an appropriate level of government revenue and addressing South Africa's climate challenges' 

  • one explores the merits or otherwise of continuing the research and development tax incentive beyond 30 September 2022; and the suitability of related policy design should the incentive be retained, and

  • one outlines how government envisages proceeding with its intention to tax vaping products.

RETIREMENT REFORM

On 14 December, National Treasury called for comment by 31 January 2022 on two discussion papers proposing 'further retirement reforms':

According to a media statement on the two papers, while government 'recognises that there might be a need to allow some access to accumulated retirement savings before retirement', it believes that 'limited pre‐retirement withdrawals from retirement funds under certain conditions ... (should be) accompanied by mandatory preservation'. With that in mind, a 'two-pot system' is proposed – restructuring retirement contributions so that two-thirds are preserved for retirement and one third is made accessible to meet pre-retirement needs. 

The paper on retirement fund governance explores policy options for strengthening commercial umbrella fund governance to 'ensure that member interests are upheld, employers are made active purchasers of retirement funds, and that the degree of competition in the market is increased'. This is noting that, while umbrella employer funds 'can offer cost advantages (allowing small employers to achieve economies of scale ... they would not ... enjoy in a small occupational fund)', there are 'several potential disadvantages, ... (including) barriers to entry, (and) opaque costs and charges'.

THE DRAFT STANDARD

 

Input is sought by 15 February 2022 on a cybersecurity and cyber resilience draft joint standard for ‘specified financial institutions’. Proposing the minimum standards required for ‘sound practices and processes’, once in force the new standard is expected to ensure that affected financial institutions are not only adequately prepared for cyber-attacks but are able to respond appropriately and recover. A comment template is provided, along with a statement of need explaining the thinking behind what is envisaged.