2008 FSB Bulletin Fourth Quarter

FSB
BULLETIN
p8
Dealing with nondisclosure in long-term
insurance contracts
Regulatory challenges
ahead: Managing change on
multiple fronts
p10
Who is fit to be a
trustee?
p12
The role of the National
Consumer Tribunal
Fourth QUARTER 2008
FSB
3
CONTENTS
Regulatory challenges ahead: Managing
change on multiple fronts
THE FSB BULLETIN IS PUBLISHED
quarterly free of charge. Views expressed
by contributors are not necessarily those
of the FSB. Reproduction, copying or
extracting by any means of the whole
or part of this publication may not be
undertaken without the prior permission
of the editor.
5
New FSB board members
6
EDITOR
Dr Franso van Zyl
ASISA: The year that was and outlook
for 2009
8
Dealing with non-disclosure in longterm insurance contracts
By Jonathan Dixon, Deputy
Executive Officer: Insurance, FSB
SUB-EDITOR
Bessie Venter
EDITORIAL COMMITTEE
Russel Michaels
Olivia Davids
COVER AND GRAPHICS
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THE FSB BULLETIN
is available on the Internet:
www.fsb.co.za
By Jennifer Preiss, Deputy Ombudsman for Longterm Insurance
9
Understanding Memorandums of
Understanding
By Kamcilla Naidoo, Legal Manager: Capital Markets
Department, FSB
10 Who is fit to be a trustee?
By Abel Sithole, board member of the FSB
12 The National Consumer Tribunal and its role
in consumer credit regulation
By Diane Terblanche, Chairperson, National
Consumer Tribunal
13 FSB gets bigger teeth
14 The determination of Fit and Proper
requirements: An overview
By Charene Nortier, Manager: Supervision, FAIS
Department, FSB
15 Conference put Fit and Proper in
spotlight
By Charene Nortier, Manager: Supervision, FAIS
Department
16 Retailers wait for more cuts in interest
rates
By Flip Meyer, a n economic consultant
18 SAIA looks forward to a new year full of
new challenges
By Viviene Pearson, SAIA Manager: Image and
Reputation
Fourth QUARTER 2008
Regulatory challenges
ahead: Managing change on
multiple fronts
* By Jonathan Dixon, Deputy
Executive Officer: Insurance, FSB
In the midst of uncertainty
about the course of
global financial market
developments, there has
been a resurgence of
interest and debate around
the issue of financial
regulation. Until recently
viewed as an intrusion by
many, appropriate financial
regulation is now increasingly
recognised as vital to the
sound workings of the
market.
Plunging stock markets and mounting
fears of credit and counterparty risks
have underscored the importance of
appropriate, risk-based prudential
regulation. But recent events have also
highlighted the importance of a broadbased approach to financial sector
supervision. For instance, the genesis
of many of today’s problems lies in
inadequate market conduct supervision
in the U.S. sub-prime mortgage market
and poor internal governance in the
financial institutions that packaged
and invested in these loans and their
derivatives.
South Africa’s banks and insurance
companies remained robust in the
face of the first wave of the financial
storm, in no small part due to a history
of sound financial regulation guided
by international best practice. An
independent assessment of South
Africa’s financial sector and regulatory
framework, conducted by the IMF and
World Bank last year, found that the
FSB’s supervision of the insurance
sector is largely in line with core
principles developed by the International
Association of Insurance Supervisors
(IAIS).
However, the events of the last
few months have alerted insurance
regulators around the globe to the
fourth quarter 2008
I FSB Bulletin
scope of remaining challenges. Risks
previously thought to be extreme tail
events can occur all too easily when our
knowledge and understanding of possible
risk events are incomplete, in particular
as they pertain to large financial groups
and conglomerates. It is clear that
international regulatory reforms are
likely to include enhancements to all
three pillars of the IAIS’s regulatory
framework, namely: ensuring more
Continued on p 4
3
Challenges
from p 3
co-ordinated, risk-based supervision
of financial soundness, especially at an
insurance group level; strengthening
corporate governance requirements; and
ensuring that the conduct of insurance
business is sustainable, through
proper alignment with the interests of
consumers.
The rest of this article outlines some of
the main regulatory initiatives the FSB
plans to put in place to address these
multiple challenges over the next few
years.
Risk-based capital requirements
The recent volatility of financial markets
on top of the inherent uncertainty
of insurance risk underscores the
importance of proper risk assessment
and management. As previously
announced by the FSB, the premiumbased approach to determining
regulatory capital for short-term
insurers is inadequate. A key priority
over the next few years will be the
introduction of a risk-based approach to
determining regulatory capital, referred
to as Financial Condition Reporting
(FCR). Perhaps more critical than the
risk-sensitive determination of capital
adequacy will be the increased focus on
enterprise risk management, ensuring
that processes to identify and manage
risks are properly embedded within an
insurer’s daily activities.
Statutory provisions to enable the
introduction of FCR requirements
through Board Notices are included in
the Insurance Laws Amendment Act,
2008. Discussions on the nature of FCR
requirements have already started,
but many of the aspects relating to
a prescribed model as well as the
framework to be applied in the use
of internal risk models still require
extensive consultation.
Group-based supervision
One of the main lessons from the recent
financial crisis is the importance of
4
establishing a holistic picture of the
risks facing insurance groups and
financial conglomerates. Responding
to this challenge, particularly across
jurisdictional borders, has been
identified as the main priority for
members of the IAIS. The FSB faces
the same challenge. This will require
enhancements to the framework for
the supervision of insurance groups
and co-ordination between national and
international regulators. Supervisory
colleges, involving information sharing
and discussion among supervisors from
all jurisdictions in which an international
insurance group operates, are likely
to become an increasingly common
feature of the regulatory environment.
In line with a risk-based approach to
regulation, the FSB plans to implement
a more intensive and ongoing form of
supervisory contact with South Africa’s
larger insurance groups.
Governance
Many recent failures have been
described as arising from poor corporate
governance. Investors tended to place an
overreliance on external rating agencies,
without the checks and balances of
adequate internal risk management and
escalation procedures. Too often, senior
management and directors have been
found lacking in their understanding of
risks being taken on.
Adequate risk management remains
the core responsibility of management
and the board, but the supervisory
framework should ensure that adequate
governance structures and procedures
are embedded in the organisation.
The general standard of corporate
governance in the South African
insurance sector remains a concern.
Addressing this issue is ultimately the
responsibility of management, however
the FSB intends to develop guidelines
on governance to assist insurers in
understanding the minimum expected
requirements, as well as providing
examples of industry good practice.
A subset of governance issues that is
receiving immediate attention relates to
FSB Bulletin I
so-called binder agreements, through
which insurance companies allow third
parties to enter into, vary or renew
a policy on their behalf. The recent
Amendment Act provides that with
such agreements, the insurer retains
liability for the actions of their agent and
must ensure proper oversight. On the
flipside, the insurer retains all rights
pertaining to business entered into on its
behalf, including client information. It is
recognised that a range of such binder
arrangements exists in practice – many
of the more detailed provisions governing
the scope of such arrangements have
been left for regulations to be drafted
over the next six months or so, in
consultation with industry stakeholders.
Market conduct – treating customers
fairly
As has been recently demonstrated,
market conduct regulation cannot
be decoupled from financial stability
considerations. Not only do inappropriate
business models or inadequate attention
to regulatory compliance issues expose
insurers to destabilising reputational
risk, but business conduct that is not in
the interests of consumers is unlikely to
be sustainable. The recent revelations
around the consumer credit insurance
market have aptly demonstrated these
problems.
Recent National Treasury and FSB
discussion papers have mapped out a
clear programme of policy and regulatory
reform for the long- and short-term
insurance sectors, in a number of
areas such as improved disclosure,
clearer intermediary arrangements
and enhanced policyholder protection.
A number of these market conduct
challenges are inter-related and
regulatory reform proposals in these
areas will be developed in parallel over
the next year or so.
Given these changes, it may be useful
for insurance company boards and
industry leaders to proactively undertake
a self-assessment of the extent to which
Continued on p 5
fourth quarter 2008
New FSB board members
Mmakgoshi Phetla-Lekhethe is the
CEO of the South African Savings
Institute (SASI). She previously
represented South Africa and 22 other
African countries on the Board of the
World Bank Group in Washington DC.
She is also a founding member of
Zambezi Capital serves as a strategic
advisor to the company’s MD.
She has a BCom (Hons) in
Economics from the Johannesburg
University and a Masters Degree
in Economics from the School
of Oriental and African Studies,
University of London.
Challenges from p 4
their business models are consistent
with a customer-oriented approach and
the customer protection intentions of
insurance legislation.
Enforcement
Enhancing the regulatory and
supervisory framework is part of the
solution to creating a sound and fair
insurance sector – equally important
Zarina Bassa, a chartered accountant,
joined Ernst & Young in 1986 and was
a partner of the firm between 1996 and
2002. She joined Absa Bank in 2002,
heading up Retail Banking Services,
later becoming the head of Absa Private
Bank as well as an executive director of
Absa. She has also served as the vicechairperson of Absa Retail Bank. She
is currently the chief executive officer
of Zarina Bassa Investments, as well
as a non-executive director of Vodacom
SA, Kumba Iron Ore and Woolworths
Financial Services, of which she is the
non-executive chairperson.
is ensuring that the framework is
effectively implemented and enforced.
As such, a further challenge is to build
a compliance culture in the insurance
sector and to make enforcement
more visible. With this in mind, the
programme of on-site visits of insurance
companies has been significantly
stepped-up. At the same time, the
introduction of an Enforcement
Committee in the FSB, responsible for
imposing administrative sanctions for
contraventions of the legislation falling
fourth quarter 2008
I FSB Bulletin
Professor Mthuli Ncube is the
director of Wits Business School. He
joined the school in 2005 as Professor
of Finance.
He holds a PhD in Finance from
Cambridge University, UK. Prof
Ncube has extensive experience as
an investment banker and founded
the Barbican and Selwyn group of
companies.
He also was a portfolio manager at
Investec Asset Management. Prior
to joining the corporate sector, Prof
Ncube was a lecturer in Finance at the
London School of Economics, UK.
under the FSB, should create a far more
visible and rapid deterrent factor.
The next few years will see regulatory
changes on a number of fronts. These
are challenging times, but they also
present a rare window of opportunity for
joint efforts by the FSB and the insurance
industry to strengthen the regulatory
framework for a sound and sustainable
insurance sector.
* This article previously appeared in the
SAIA Monthly Newsletter
5
ASISA: The year that was and
outlook for 2009
A significant event in 2008
was a decision by companies
in the South African savings
and investment industry to
disband the four associations
representing them and
to form a single, new
association.
The Association for Savings and
Investment South Africa (ASISA) opened
its doors at the beginning of October
2008. It replaces the Association
of Collective Investments (ACI), the
Investment Management Association
of South Africa (IMASA), the Linked
Investment Service Providers Association
(LISPA) and the Life Offices’ Association
(LOA).
ASISA now represents the majority of
South Africa’s asset managers, collective
investment scheme management
companies, linked investment service
providers, multi-managers, and life
insurance companies.
Leon Campher, CEO of ASISA, explains
that the former associations all shared
one common goal: to provide consumers
with savings and investment options.
“The result was that regulators and
policy makers had to engage four
different lobby groups, often on issues of
common interest. With ASISA we have
created the single body that Government
was looking for to engage on policy
issues,” says Campher.
The members of the four associations
also subscribed to Codes of Conduct,
but often a company would belong to
more than one association and therefore
different Codes of Conduct would apply
to one company.
6
Campher says this duplication of effort
was not in anybody’s interest, least of all
that of the consumer.
“As a united industry we are now able
to promote healthy competition among
companies by focusing on issues such
as achieving meaningful disclosure
and providing the tools that enable
consumers to pick the best option.”
Campher says one of the first items on
ASISA’s agenda is to improve disclosure
within the industry by making products
across sectors more comparable in
relation to costs versus benefits.
Commission and Early Termination
Values
In September 2008 the Regulations
on Commission and Early Termination
Values, which form part of the Longterm Insurance Act, 1998, were
gazetted.
Upfront charges, consisting mainly
of upfront commission and the upfront
acquisition cost of insurers (including
distribution, marketing, underwriting
and issuing costs), affect early
termination values. The only way to
FSB Bulletin I
reduce these charges was to change the
upfront commission structure and for
insurers to reduce the level of upfront
acquisition costs.
“The new regulations will go far in
achieving a balance between upfront
and as-and-when commission. The
new commission model is fair to the
intermediary and at the same time
ensures sustainability of the life
industry and above all, a fair deal to
policyholders. With the implementation
date of 1 January 2009, life companies
had to work hard to meet a tight
deadline.
“The contractual savings environment
has changed to one marked by increased
job mobility, uncertainty of income and
shorter-term investment periods. The
new year will see implementation of
regulations that have responded to this
change,” he says.
Consumer credit insurance
Early in 2008, the Consumer Credit
Insurance Enquiry Report was released
by an independent panel of enquiry,
appointed by the life and the short-term
fourth quarter 2008
insurance industry to identify problem
areas in the consumer credit insurance
market.
“As a result, the life insurance industry
committed itself to ensuring that
consumers who have bought consumer
credit insurance when taking on debt are
aware that they have life and/or disability
cover and understand what they are
covered for.
“ASISA will continue issuing best
practice recommendations aimed at
encouraging life companies to address
problems in the consumer credit
insurance arena,” says Campher.
Critical illness disclosure
Critical illness insurance products (also
known as dread disease or severe illness
products) are likely to become less
confusing once life insurers get approval
to implement a standard disclosure grid
indicating to policyholders when their
critical illness products will pay out.
Accoring to Campher the disclosure
grid will show policyholders what
percentage of the insurance cover will be
paid out for four different severity levels
applied to four major medical conditions
which make up between 70% and 90% of
all critical illness claims: heart attack,
cancer, stroke, and coronary artery
bypass graft.
“This standard disclosure will go a
long way in facilitating competition, as it
will enable consumers who do not have
a technical understanding of medical
conditions and definitions to make a
meaningful comparison between the
various products on offer and to select
one suitable to their needs.
“The implementation of the disclosure
grid depends on approval by the
Competition Commission.”
Removing projections
As from 2009, the life industry no
longer uses projected maturity values
in quotations and policy documents.
The aim of projecting maturity values
was to show consumers the value of
long term savings and the power of
compound interest, and to provide a tool
for financial planning. “Unfortunately
policyholders often misunderstood
projections to be accurate forecasts of
maturity values. Some even mistook
projected values as guarantees, which
often led to disappointment,” he says.
Telephonic pre-testing HIV counselling
service
“South Africa achieved a world first
when the life industry made telephonic
pre-test counselling available for life
insurance applicants required to undergo
HIV tests. In the global insurance
environment, life insurance applicants
receive only written pre-test counselling
information before consenting to the HIV
test,” says Campher.
In South Africa life insurance
applicants can opt for written pretest counselling, individual pre-test
counselling and telephonic counselling.
Telephonic counselling became available
at the beginning of July, and can be
accessed from 07h00 to 19h00, Mondays
to Fridays, in all official languages by
calling 0800 562 562.
Collective investment schemes and
financial markets
Accoring to Campher a significant
achievement for the collective
investment schemes industry was a
recent agreement from the SA Reserve
Bank and the FSB, allowing local fund
managers to invest in British American
Tobacco (BAT) shares listed on the
JSE, without having to reposition their
offshore exposure when at the maximum
20% level. While BAT shares are
considered a foreign share by the SARB,
asset managers will have two years
in which to rebalance their offshore
allocation back to 20%.
Campher says three significant
developments aimed at streamlining
local financial markets will continue in
2009. These are:
• The dematerialisation of money market
instruments, which will result in an
electronic register of ownership for
fourth quarter 2008
I FSB Bulletin
money market securities.
• The shortening of the equity settlement
period to three days following a
transaction.
• The introduction of single ownership
records, enabling greater transparency
on who the real owners of shares are.
Surviving the global turmoil
While tough regulation of our financial
services sector combined with ongoing
exchange controls has helped South
Africa weather the global financial
markets crisis, local markets and
investors have been feeling the pain.
Campher says many local investors
have abandoned the equity market for
cash, which over the short term may
seem to be the safer option. But he
reminds that equities have historically
always outperformed cash over the
longer term. “Investors lose out on the
inevitable upsurge time and time again.
“Unfortunately the South African
savings and investment rate has suffered
as a result of the severe market volatility
combined with higher interest rates
and a higher cost of living due to higher
fuel prices. Campher says one of the
challenges for 2009 will be to convince
South Africans that it is in their long term
interest to hold on to their savings and
investments as well as their risk policies.
“ASISA aims to play an integral part in
achieving a greater savings culture in
South Africa by working as a united body
towards making financial services more
relevant to the consumer.
“By uniting our industries we can now
collectively apply ourselves to making a
bigger difference by speaking with one
voice.
“ASISA will be an active participant in
creating an environment that promotes
equal opportunities for its members
through holistic legislation, while
looking after the interests of consumers
and ensuring the sustainability of
the industries we represent and the
intermediaries who promote us.”
7
Dealing with non-disclosure in
long-term insurance contracts
By Jennifer Preiss, Deputy Ombudsman for Long-term Insurance
Section 59 of the Long-term
Insurance Act, 1998 deals
with liability in the case of
non-disclosure in a long-term
insurance contract. Section
59(1)(a) provides that the
insurer will remain liable
unless the non-disclosure
materially affected the risk.
As to what the word “materially” means
for the purposes of section 59(1)(a),
section 59(1)(b) reads:
“The … non-disclosure shall be
regarded as material if a reasonable,
prudent person would consider that the
particular information… should have
been … disclosed … so that the insurer
could form its own view as to … the
assessment of the relevant risk.”
This test is not subjective, but objective.
It does not depend upon what the insurer
would have done if it had known the
truth, but on what a reasonable, prudent
person in the applicant’s shoes would
have considered as being relevant to
enable the insurer to assess the risk.
8
Where a non-disclosure is material,
the insurer may cancel the policy even if
it would have issued a policy on different
terms had the material information been
disclosed.
In a trial in Durban in 1991, Judge
Didcott suggested that in such a case the
policy should rather be “reconstructed”.
If the insurer would have issued the
policy, but knowing the truth would have
excluded the condition not disclosed
or loaded the premium, then effect
should in fairness be given to such a
“reconstructed” policy, to accord with
what the insurer would have done.
Because it was not part of the judgment
and because it was not something the
law provides for, his proposed solution is
not binding authority.
Ditcott principle
This became known as the “Didcott
principle”. Some insurers have applied
the Didcott principle spontaneously, and
the Long-term Insurance Ombudsman
liases with other insurers to settle
complaints along the lines thereof.
Insurers have expressed some concern
that if the approach is generally known,
unscrupulous insurance applicants may
exploit it. The argument is that if the
insurer does not discover the applicant’s
untruth at proposal stage about an
FSB Bulletin I
existing condition, the insured gains at
claim stage; and if it is detected and the
policy is reconstructed, the insured will
in effect not lose.
In terms of the Long-term Insurance
Ombudsman’s approach the
reconstruction of the policy would not be
considered where non-disclosure can be
shown on a balance of probabilities to
have been fraudulent, with the intention
to deceive or anti-select. An approach
along the lines of the Didcott principle
would recognise that where the nondisclosure is not fraudulent it would
be the insurer who would unfairly gain
by being allowed to escape liability
when, had the disclosure been made
at proposal stage and an exclusion
imposed for the condition disclosed or
the premiums loaded, the insurer would
nevertheless have issued the policy and
subsequently paid the claim.
Presently our law does not provide for
an application of the Didcott principle
and a court would not be bound to
apply the principle. The same does
not apply to the Long-term Insurance
Ombudsman’s scheme. On the
contrary, because the Ombudsman
has the power and obligation to apply
considerations of equity, it may in
suitable circumstances make a ruling
giving effect to a policy as reconstructed
along the lines of the Didcott principle.
fourth quarter 2008
Understanding
Memorandums of
Understanding
By Kamcilla Naidoo, Legal
Manager: Capital Markets
Department, FSB
A Memorandum of
Understanding (MOU) is an
effective tool that is used
by regulators, like the FSB,
to facilitate the sharing
of information between
regulators. As financial
markets become more
globalised, the need for
cross-border cooperation
between regulators has
become important.
The FSB became a signatory to the
IOSCO MMOU on 18 March 2003. The
process of becoming a signatory is quite
onerous as it involves the screening of
domestic securities legislation to see
whether the legislation creates any
barriers or obstacles to information
sharing. If barriers exist, the applicant
is requested to make the necessary
amendments to their legislation before
the application can be approved.
There are currently 48 signatories to
the IOSCO MMOU. Of these signatories,
21 countries are members of the
Emerging Markets Committee of IOSCO.
During 2007, 726 requests were made for
information sharing among signatories.
Of these requests, 83% related to
information about insider dealing,
market manipulation, misrepresentation
of material information and other
fraudulent practices. The signatories
also sought assistance from other
jurisdictions in taking statements and
testimonies under oath.
Apart from being a signatory to
the IOSCO and Southern African
Development Community (SADC)
MMOUs, the FSB has also concluded
bilateral MOUs with 48 jurisdictions.
The FSB recently signed bilateral
MOUs with the Dubai Financial Services
Authority and the Securities Exchange
Commission of Ghana.
The MOU between the FSB and the Dubai Financial Services Authority (DFSA) was
signed by Rob Barrow, former Executive Officer of the FSB (left) and David Knott,
Executive Officer of the DFSA on 27 May 2008 in Paris.
An MOU is not a legally binding
agreement, but rather gives the
framework whereby signatories commit
themselves to continued cooperation,
participation and assistance.
A typical example of an MOU is the
International Organisation of Securities
Commissions’ (IOSCO) Multilateral
Memorandum of Understanding (MMOU)
which is concerned with consultation,
cooperation and the exchange of
information. The intention of the MMOU
is to provide the signatories, which
are securities regulators, with mutual
assistance to facilitate the performance
of their functions within their respective
jurisdictions, and to enforce or secure
compliance with their laws and
regulations.
fourth quarter 2008
I FSB Bulletin
9
Who is
By Abel Sithole, board member of
the FSB (in his personal capacity)
trustees. This is not to advocate lax
governance in managing the affairs of
funds or to unleash unqualified trustees
to mismanage the pension savings of
millions of members. However, we need
to revisit the meaning of trusteeship and
the role of trustees before we propound
an exclusive conception of trusteeship
and its role.
History
The trusteeship of retirement fund arrangements seems to
be the most contested space in current governance debates
in South Africa. There is an outcry that billions of retirement
fund members’ assets are entrusted to trustees who have no
expertise and experience in the management of these funds.
The perceived lack of suitably qualified
trustees with appropriate training has
resulted in a call for the regulator to
issue guidelines in this regard. It has
also opened a great opportunity for
institutions to provide training and for
those who believe to be suitably qualified
to tout their services as professional
trustees.
One cannot argue against empowering
10
trustees with training and education.
Training, education and learning must be
encouraged and supported.
What must be resisted are the
attempts to make the trusteeship of
retirement funds the preserve of a few
who consider themselves duly qualified
to the exclusion of others, especially
in the South African context, elected
members of funds and union appointed
FSB Bulletin I
Without going back to the history and
legal basis of trusteeship, it suffices
to point out the obvious and literal
centrality of “trust” embedded in concept
of “trust (the trust instrument), trustee
and trusteeship.” A trustee is and must
be a trusted and trustworthy person or
entity. This is the primary qualification
of a trustee. It is the foundation of other
key attributes such as familiarity with the
interests of the beneficiaries of the trust,
having the trust and confidence of the
testator (the establisher of the trust) and
or beneficiaries of the trust, as well as
having and enjoying legitimacy with the
testator and or beneficiaries of the trust.
A trustee must make decisions that are
in the best interest of the trust and its
beneficiaries (not those of the trustee).
The trust and its beneficiaries must be
confident that this is the case. A trustee
must in the first place be responsible
and accountable to the trust and or its
beneficiaries and in some instances to
the wishes of the testator. As a result,
while trustees should be guided by the
trust at all times, they must know and
take into account the needs and wishes of
fourth quarter 2008
fit to be a trustee?
the beneficiaries.
This requires regular engagement,
consultation and reporting to the
beneficiaries. The communication
between trustees and beneficiaries is
heightened in the case of a retirement
fund as members of funds are
predominately people who are capable
of managing their own affairs. As such,
trustees must create avenues for
member participation in the running
of these funds. The fact that most
South African funds are now defined
contribution with varying degrees of
member choice in investment and risk
benefits makes member participation
imperative. This means that trustees
must be accessible and available to
engage members on the affairs of the
fund.
Qualification
Qualification is not absolute. Qualification is relative to the role that must
be fulfilled and task that must be
performed. For example, a rocket
scientist cannot do what a nurse can do,
and many famed technology geeks are
renowned for their lack of basic life skills
such as making a sandwich or frying an
egg. There is no single person who can
be qualified to perform all the tasks that
must be performed in the management
of funds. Such a person would have to
be a legal, actuarial, accounting, risk,
investment and administration expert,
a near impossibility! We can therefore
only appreciate who is qualified to be a
trustee if we are clear about the role of
the pension fund trustee.
In theory a trustee is responsible for
the proper record and bookkeeping
(administration), accounting, actuarial,
tax planning, risk management,
communication, prudent investment, and
disbursement of the assets or benefits
of a trust, and in this case, a pension
fund. As argued no person or entity can
perform all these tasks single-handedly.
Therefore, in practice, a trustee’s main
function is to appoint specialists in each
area, and to monitor and manage their
performance. To do this it is necessary to
have an idea of what each specialist area
does. This is a much broader and generic
skill not very different from that needed
to appoint or chose for example, a good
builder, doctor, friend, partner, etc.
These choices are not dependent on
the level of education. Often those with
higher levels of education make the
worst choices. What counts is judgment
and wisdom, which can be enhanced
by education and experience but is not
dependent on them. An appreciation
and understanding of the significance
and impact of the decision, and the
desire and endeavour to do the right
thing count. This requires independence
of mind, vigilance and a predisposition
not to be swayed by fancy Powerpoint
presentations, suits and jargon. This
should be augmented by the audacity to
ask questions no matter how silly they
may seem.
If trustees still feel they do not have
the requisite skill to appoint, manage
and monitor specialist service providers,
they can employ people to help them
or engage an agent to assist them. The
issue then becomes, can trustees trust
their agents?
To answer the question who is qualified
to be a trustee, we will have to ask the
following questions, among others:
• Who is trusted and trustworthy with
regard to the trust? (not forgetting
honesty, integrity and impartiality)
• Who is familiar with and has the
best interests of the trust and its
beneficiaries?
• Who will have legitimacy in the eyes
of the trust, its beneficiaries and the
testator, whose decisions will not be
doubted and questioned?
• Who will be available and accessible to
the trust and its beneficiaries to enable
participation and engagement?
• Who has moral courage and rectitude
to ask the questions that others are
afraid to ask and say the things others
Continued on p 13
Qualification is not
absolute. Qualification
is relative to the role
that must be fulfilled
and task that must be
performed.
fourth quarter 2008
I FSB Bulletin
11
By Diane Terblanche, Chairperson,
National Consumer Tribunal
The National Consumer
Tribunal and its role in
consumer credit regulation
Market conduct regulation
stems from the accepted
premise that market forces
alone will not achieve the
optimal balance between
consumer interest and
profitability.
To this end, the National Credit Act, 2005,
is aimed at achieving a far reaching
readjustment within the consumer credit
market.
One of the changes envisaged by the
12
Act is the manner in which disputes
between consumers and the credit
industry are resolved. While debt
enforcement is left largely within the
domain of the Magistrates’ Courts,
conduct and relationship issues are
now channelled through an arbitration
process. This feeds into the National
Consumer Tribunal for adjudication if
the prerequisite attempt at consensual
resolution fails.
The National Credit Regulator
investigates complaints relating to
allegations of prohibited conduct. The
complaint route should be followed for
FSB Bulletin I
serious or general contraventions of
the Act. A dispute, by contrast, involves
questions of fairness and lawfulness in
the dealings with a specific consumer
or in a specific credit transaction. The
latter is generally resolved at industry/
supplier level.
The Regulator may deal with a
complaint in various ways. It may –
• refuse the complaint if it finds no merit
(the Act calls this a “non-referral”);
• classify the matter as a dispute and
refer it to a debt counsellor, ombudsman,
Provincial Consumer Court or alternative
dispute resolution (ADR) agent for
resolution;
• investigate the matter and resolve it
through a compliance notice or consent
agreement;
• investigate the matter and then refer it
to a Provincial Consumer Court or to the
Tribunal for adjudication;
• if considered urgent, or where interim
relief is required, refer the matter
directly to the Tribunal, without further
investigation.
Self evident
In the last two options, the role of the
Tribunal is self evident - it will weigh up
the findings of the investigation in light
of the respondent’s reply, and issue the
appropriate ruling. But the Tribunal also
has a role in the earlier circumstances.
In the case of a non-referral, the Tribunal
may accept the matter for adjudication.
Should the matter be dealt with as a
dispute, the Tribunal may adjudicate the
matter if the previous process fails.
Where the Regulator issues a
compliance notice, the Tribunal may
be called upon to enforce it, and the
consensual resolution of a complaint
may lead to an application to the
Tribunal for a consent order. The other
important area of credit regulation is
the relationship between the Regulator
and registered entities (credit providers
fourth quarter 2008
and credit bureau, among others). In this
terrain, the Tribunal acts as the appeal
forum against regulatory decisions and
as agent for the judicial enforcement of
compliance.
Tribunals are especially well-suited
to the adjudication of sectoral and
consumer issues, due to the informal
proceedings, specialised knowledge of
adjudicators and opportunity for direct
participation by the parties (which
reduces the cost of participation).
The trend towards specialised tribunals
is far advanced in developed economies.
The UK Leggatt Report (2001) found
that tribunals in the UK deal with
more than one million matters each
year – more than the number of cases
processed through conventional courts.
The establishment of the Consumer
Tribunal, as part of the National Credit
Act’s reforms in the area of consumer
credit regulation, is South Africa’s first
significant step in this direction.
The National Consumer Tribunal has
jurisdiction throughout South Africa and
its orders may be served or executed
and enforced as if orders of the High
Court. Its vision is to be a credible and
competent arbiter of competing rights
and interests in the credit and consumer
market.
Trustee continued from p 11
are afraid to say in the service of the
trust?
It would be nice if a trustee has
the “right” level of education and
experience. If not, they can “buy”
or “contract” it. Therefore the level
of education and experience should
not exclude any person from being a
trustee. However, if a person is not
to be trusted and trustworthy, does
not have the best interests of the
trust and its beneficiaries, does not
enjoy legitimacy, is not accessible and
available, such a person should not
be a trustee. A trustee can outsource
everything except these attributes.
FSB gets bigger teeth
Due to the success of the
Enforcement Committee
of capital markets, the
FSB has extended the
Committee to include other
laws the FSB regulates.
The FSB appointed its Enforcement
Committee members on 5 December
2008. The Committee was created
when the Financial Services Laws
General Amendment Act, 2008, came
into operation on 1 November 2008.
The mandate of the Committee is
to consider contraventions and noncompliances with all FSB legislation,
and, in appropriate cases, to impose
unlimited (but specified) financial
penalties, compensation orders and
cost orders.
According to Dube Tshidi, Executive Officer of the FSB, this is a major
step forward in augmenting the
enforcement capacity of the FSB.
“Effective enforcement of FSB
What a trustee cannot outsource
is the fiduciary responsibility and
accountability.
Most suitable
If we apply these criteria, it turns out
that those who appear not to be qualified
because they do not have the certificate,
diploma or charter may be the most
suitable candidates and practitioners.
Those are academically qualified may
just not make the cut as they may
not meet some of the fundamental
requirements of trusteeship. For
example, a shop steward* who dedicates
his working life to serve fellow workers
may just be a preferred trustee over
a qualified actuary who is also a
fourth quarter 2008
I FSB Bulletin
legislation is viewed as an important
success factor in the FSB’s strategic
plan. The major advantage of the
Enforcement Committee is that
matters can be dealt with much more
efficiently than through a court of law,”
Tshidi said.
The predecessor of the Enforcement
Committee, the Capital Markets
Enforcement Committee, has been
in existence since 2005 and dealt
with market abuse contraventions.
In the three and a half years of
its existence, the Capital Markets
Enforcement Committee imposed
penalties in excess of R8 million on
21 respondents. The chairperson of
the FSB Enforcement Committee
is Judge Frikkie Eloff, the retired
Judge-President of the Transvaal.
Deputy chairpersons and members
of the Enforcement Committee were
appointed for their legal knowledge
or their expertise relating to the
industries supervised by the FSB.
Source: FSB media release
8 December 2008
charted accountant and an advocate
with 30 years of experience to whom
trusteeship is just a job and a way of
making a living.
The real challenge regarding the
governance of retirement funds is
the fiduciary responsibilities and
duties of service providers to trustees
rather than the skill, competence and
experience of trustees. Shouldn’t the
fiduciary responsibilities and duties of
service providers to trustees and funds
be provided for in legislation?
*This is in memory of and a tribute
to Selby Maise, a trustee of the
Mineworkers Provident Fund who was
killed by members while addressing
them on the benefits of the fund.
13
The determination of Fit and Proper
requirements: An overview
By Charene Nortier, Manager:
Supervision, FAIS Department, FSB
The long awaited “new” FAIS
Fit and Proper requirements
were published in the
Government Gazette on 15
October 2008 (Board Notice
106).
What is important to understand is that
there are four documents that should be
read together:
• Board Notice 103 of 2008
– Determination of Continuous
Professional Development
Requirements, 2008;
• Board Notice 104 of 2008
– the Exemption in respect of services
under supervision in terms of
Requirements and Conditions, 2008;
• Board Notice 105 of 2008
– the Determination of Qualifying Criteria
and Qualifications for Financial Services
Providers, 2008; and
• Board Notice 106 of 2008
– the Determination of Fit and Proper
Requirements for Financial Services
Providers, 2008.
These board notices govern and
arrange all requirements and conditions
to which authorised financial services
providers (FSPs), key individuals and
representatives must adhere. The
Determination of Examination Body
Criteria, 2008, Board Notice 154 of 2008,
provide the criteria that applies to the
examination bodies.
What is the origin of the Fit and Proper
requirements?
Articles 8 and 13 of the Financial
Advisory and Intermediary Services Act,
2002 (FAIS Act) provide the background
14
and reason for the Fit and Proper
requirements. These sections of the
Act govern both FSPs where a sole
proprietor (natural person) applies for
authorisation, and where FSPs that are
juristic persons apply for authorisation.
What are the Fit and Proper
requirements?
The following areas are addressed in the
Fit and Proper requirements:
Honesty and Integrity: The
requirements are essentially similar
to the previous versions of the Fit and
Proper requirements. This affects all
sole proprietors, key individuals and
representatives.
Competency: This aspect addresses
qualifications, experience and regulatory
examinations.
Qualifications: As from 2010 all sole
proprietors and key individuals must
meet the qualification requirements
when they apply to the Registrar for
authorisation as an authorised financial
services provider or approval as a key
FSB Bulletin I
individual. They will not be able to
apply if they only meet the entry level
qualification requirements.
Representatives can be appointed
if they only meet entry level
requirements, provided that they work
under supervision until meeting the
qualification requirements. They have
a maximum of five years from the
date of first appointment to meet the
qualification requirements.
The entry level qualification
requirements are as follows:
• Categories I and IV – Matric or
equivalent qualification;
• Categories II, IIA and III – relevant
bachelors degree or equivalent
qualifications;
• Representatives who only work
with subcategory 1.1 – Long-term
insurance category A, or subcategory
1.19 – Friendly Society Benefits, only
need to prove that they can read, write
and calculate. The FSP that employs
them must be satisfied that they can
perform their duties. This requirement
acknowledges the particular challenges
fourth quarter 2008
faced by this part of the industry.
The relevant qualifications are
published in Board Notice 105 of 2008.
This list of qualifications will be updated
quarterly.
Experience: The experience
requirements are similar to the
previous versions of the Fit and Proper
requirements. The purpose of the
experience requirement is to ensure
that the person who acts as a key
individual or representative has gained
experience in a particular category or
subcategory of financial services. Where
a representative has not yet gained the
required experience, they can work
under supervision until they meet the
requirements.
Regulatory examinations: These are
new and consist of two levels:
• Level 1 addresses the legal obligations
that are imposed on a sole proprietor,
key individual and representative. Key
individuals and sole proprietors will
write the same examination, while
there are different examinations for
representatives.
• Level 2 addresses product specific
knowledge. This is not product supplier
specific information, but addresses
the underlying knowledge that a
representative should have about a
specific subcategory.
The regulatory examinations will be
based on the qualifying criteria that are
published in Board Notice 105 of 2008.
The examination bodies will be finalised
during 2009 and the first examinations
will take place during 2010. A list of
examination bodies and their contact
details will be available during the
second half of 2009.
Operational Ability: This affects all
FSPs (sole proprietors and juristic
entities) and key individuals. The
requirements have been expanded to
include more detailed requirements.
Although there are more requirements,
there is a 12 month implementation
period, which means that FSPs and
key individuals must meet these
requirements by 31 December 2009.
Financial Soundness: The
requirements for financial soundness
have been amended, and are more
stringent. It only affects FSPs. FSPs
in all categories are required to meet
different levels of financial solvency. The
implementation date for existing FSPs is
31 December 2010.
Continuous Professional Development:
This is a brand new requirement
and affects sole proprietors, key
individuals and representatives. The
requirement is that once a person
meets the qualification, experience and
regulatory examination (levels 1 and 2)
requirements, they only have to meet the
continuous professional development
(CPD) requirements thereafter. CPD
aims to help people keep their knowledge
current, without requiring them to
obtain more qualifications. CPD will be
calculated according to the hours spent
on certain recognised developmental
activities, and ranges between 15 hours to
60 hours over three years. This will start
from 2010.
Any queries can be directed to
[email protected]
Conference puts Fit and Proper in spotlight
By Charene Nortier, Manager: Supervision, FAIS Department, FSB
The FAIS and Consumer Education
Departments of the FSB presented a
successful conference in October last
year, which launched the new Fit and
Proper requirements.
The conference was fully booked
within eight days of the opening of
registration. The 450 delegates in
attendance represented the spectrum
of the financial services industry,
including representatives from
professional bodies and industry
associations, corporate FSPs, sole
proprietors and training providers.
The speakers at the conference were
people who had been involved with
the development of the new Fit and
Proper requirements, an exercise that
started in October 2006 and culminated
in the publication of the Determination
of Fit and Proper Requirements for
Financial Services Providers, 2008 on 15
October 2008.
The conference was opened by Adv
Dube Tshidi, Registrar of Financial
Services Providers. The keynote address
was delivered by Manasse Malimabe,
Head, Enforcement Department of FAIS
while the closing remarks were made by
fourth quarter 2008
I FSB Bulletin
Gerry Anderson, Deputy Registrar of
Financial Services Providers.
The range of topics and wellinformed speakers ensured a
succesful conference. Feedback from
the delegates was very positive, and
by all accounts this was a conference
that was professional and informative.
The FSB would like to thank all the
speakers, exhibitors and delegates for
their contributions.
15
Economic outlook 2009
Retailers wait for more cuts
in interest rates
By Flip Meyer, an economic consultant*
A decline in interest rates in
2009 should boost the real
growth (after inflation) of
retail sales for 2009 and end
March 2010. Retail sales have
been under huge pressure in
2008. During December 2008
retailers worldwide cut prices
to get rid of stock.
This prompted some consumers to go
bargain hunting.
However, much more is needed for
consumers to regain their confidence.
Fear of losing jobs and tight household
budgets will prevail in 2009.
The financial relief of cuts in the petrol
price and interest rates would probably
lead to more repayments in household
debt.
The economy grew by 0,2% in the third
quarter of 2008. This is dismal compared
to 2007 when the economy grew by more
than 5%.
Inflation peaked at 13,7% in August
2008. Economists expect a decline in
the inflation rate in 2009 owing to the
lack of demand in the retail sector. It is
predicted that the inflation rate will be in
single digits early 2009.
This should lead to at least another 4
percentage points cut in the repo rate of
the Reserve Bank.
Prof Johan Willemse, a former
Economist of the Year from the
University of the Free State, expects
that interest rates could decline by 5
16
This graph compiled by Johan Rossouw of Vuvani Securities shows how the
inflation rate will probably decline in 2009. The average inflation rate is
expected to be 7,2% for 2009. Some months by the end of 2009 it may even
decline under the 6% level. Although the inflation rate will be over 10%
early in 2009, the average will be above 6%.
percentage points by the end of March
2010.
Should this prediction be on target it
would mean that by the end of March
2010 interest rates would be at the
same level as in June 2006. From June
2006 until June 2008 the Reserve Bank
increased its repo rate by 5 percentage
FSB Bulletin I
points to 12%. Hikes in the prime rates
of banks and mortgage rates followed.
From June 2008 until the next decline
interest rates have been kept on hold
although the inflation rate peaked at
over 13,7% in August 2008. The cut
in the Reserve Bank repo rate by 0,5
percentage points shows that the
fourth quarter 2008
wheel has turned. There is still a huge
gap between the inflation rate and the
inflation targets set by the Reserve Bank
(between 3 and 6%). After the December
2008 cut the prime lending rate of banks
was 15%.
“The economy needs a boost and
although the inflation rate might be
above 6% in 2009, the Reserve Bank has
a priority to get the economy going,” says
Willemse.
Dr Cees Bruggemans, Chief Economist
of First National Bank, predicts that the
prime lending rate of banks will be cut to
12% by the end of 2009.
Modest overall economic growth
The 37 economists, participating in
the Economist of the Year competition
of Sake24, predict that the growth for
2009 will be about 2,5%. Some, like
Pieter Laubscher of the Bureau for
Economic Research of the University of
Stellenbosch, foresee a growth rate of
1,9%. It is expected that the economy will
react to the interest rate cuts in 2010 and
grow by between 3% and 4%.
The sharp economic slowdown will
continue in 2009 but this will not be an
overall recession.
The problem with an overall statistic
like the growth in the Gross Domestic
Product (GDP) is that it does not give the
full picture.
Some sectors of the economy like
construction are doing relatively well,
while the retail sector has been under
severe pressure for some time. Motor
car sales have declined sharply. This
sector has experienced a recession long
before other retail sales showed signs of
a downturn.
The lack of confidence can be seen
in economists’ predictions for 2009. In
January 2008 the consensus was that
the South African overall economy
would grow by more than 4% in 2009.
The economists, who may adjust their
predictions monthly, now predict a
growth of 2,5% for 2009. This indicates
how expectations worsened in 2008 as
the year progressed.
The expected consumer spending after
inflation until end March 2010 will not be
much above 2%. As consumer spending
will be growing from a low base, there
is not much to get excited about, but at
least it will stop the bleeding.
Inflation rate
The economists, participating in the
Economist of the Year competition,
expect an inflation rate of about 7,4% for
2009.
This prediction will be vulnerable
should the value of the rand to the
US dollar worsen from the rand value
prevailing at end November 2008 when
this report was written.
Etienne le Roux, Senior Economist
of Rand Merchant Bank, explains the
influence of the rand/dollar exchange
rate: “Should the rand/US dollar
exchange rate post an average of R10,50
for 2009, the inflation rate will be 7,4%.
Should the exchange rate worsen
to R12, 50, the inflation rate will be
between 8% and 9% and for 2010 it will
decline to just outside the upper-end 6%
fourth quarter 2008
I FSB Bulletin
target.”
Predicting the value of the rand is seen
as one of economists’ most difficult
tasks as so many factors outside South
Africa have an effect on the value of the
local currency.
The predicted decline in the inflation
rate in 2009 is due to the following
factors:
* The oil price has fallen by more than
60% in 2008. Although the weaker rand
has put upward pressure on petrol
prices, the sharp decline in dollar prices
of oil should make further cuts in petrol
and diesel prices possible;
* The rate of inflation for food products
has declined significantly;
*The retail sector of the economy has
found it difficult to increase prices due
to the lack of demand;
*The official basket of goods and
services measuring the CPIX will be
reviewed and changed. This could
lower the inflation rate by 2 percentage
points. This will be a statistical technical
correction.
* Flip Meyer is a freelance journalist and
analyst. His web site address is www.
flipmeyer.com
17
SAIA looks forward
to a new year full of new
challenges
By Viviene Pearson, SAIA Manager: Image and Reputation
As the years come and go, old
and new challenges surface
and resurface to keep the
insurance industry on its
toes. At the beginning of a
new year, it is appropriate
to take a quick look at the
important issues faced by
the South African Insurance
Association (SAIA) and the
industry it represents.
One of the most relevant issues facing
the financial services sector in South
Africa, is the state of the financial
services sector globally.
The global financial crisis cannot
be ignored, and its potential effect on
our economy as a whole and our own
financial services sector specifically will
have to be high on any 2009 agenda.
18
But, apart from the global context in
which we operate, other challenges
more specifically related to the way role
players in the short-term insurance
industry do business will be on the
industry agenda for 2009. Challenges
relating to legislation and regulation,
motor insurance, transformation, and
image and reputation all form part
of the kaleidoscope of issues to be
addressed in this new year.
Legislation and regulation
On the ever changing and always
interesting legislation and regulation
front, the industry together with all the
other relevant role players including the
FSB, will be facing several important
issues in 2009.
The Insurance Laws Amendment Act,
2008, will keep everyone operating in
this field quite busy in the first part
of 2009 with the drafting of terms of
reference the development of policy
FSB Bulletin I
proposals and the drafting of the
regulations. Two of the key areas for the
short-term insurance industry are binder
agreements and the demarcation of
accident and health policies and medical
schemes products.
It is important that these areas are
addressed in a way that would be
acceptable to all parties, and ultimately
meet the needs of consumers.
Issues around section 48 intermediaries, their status under FAIS, and
other related matters will also need
to be appropriately addressed during
the drafting of regulations for binder
agreements.
FAIS-related issues, and specifically
the Post 2009 FAIS Fit and Proper
Requirements, and the potential effect
of these on the industry will become
increasingly top of mind in 2009. A huge
task lies ahead regarding awareness
creation around these issues in order for
the industry to be in a position to comply.
Another key area that will create many
fourth quarter 2008
opportunities for debate, discussion and
possibly controversy is the consumer
recourse arena.
With a variety of ombuds schemes
operational in South Africa there is a
need for coordination and cooperation
among such schemes, as well as a huge
need for higher levels of consumer
awareness about recourse rights,
responsibilities, and avenues. This
debate is of great importance in the
financial services arena.
Another aspect that needs agreement
is Financial Condition Reporting (FCR).
As this is an area that must also be seen
in the context of global practice, as well
as increasing debate, care will have to
be taken to find the appropriate route for
South Africa.
The finalisation of the industry reaction
to the Consumer Credit Insurance
Enquiry will be one of the earliest
priorities of 2009, followed by addressing
areas of concern pointed our by the
Enquiry. An example of this would be
the drafting of an industry strategy for
consumer education in this field, and its
implementation.
An attempt to better understand the
changes brought about by the Road
Accident Amendment Act, 2003, and its
effect will also be an industry priority in
2009.
Motor insurance
The motor books of insurers are causing
grave concern to insurers, as well as the
short-term industry. The cost of motor
claims has become so high that there is
concern about the future of affordable
motor insurance.
The main contributor to the cost of
motor claims is motor repairs. High
accident rates, high cost of repairs and
many other factors are contributing to a
very difficult and worrying situation.
It is for this reason that the industry
will be looking into the whole area of
road safety, and are identifying possible
ways of assisting the other relevant role
players, including the Department of
Transport, with road safety issues.
Transformation
Transformation has been a priority for
the industry for some time now. The
future of the Financial Sector Charter
is therefore a very important priority
for SAIA. Every effort will be made
to contribute to the gazetting of the
Charter as early as possible in 2009.
The fact that the Charter has not yet
been gazetted, that little or no progress
seems to have been made regarding
the differences of opinion of different
constituencies on ownership issues, the
fact that the industry is actually now
governed by the BBBEE Codes in the
absence of a gazetted sector code, and
the uncertainty of when the Charter
would be gazetted, all contribute to a
difficult time for the industry regarding
transformation.
Some initiatives, like the provision of
accessible/affordable financial services
and projects and consumer education
as well as the enterprise development
are areas in which our industry has been
making good progress. These initiatives
are not part of the BBBEE Codes and
are being implemented without context.
There is a concern that the future of
some of these undertakings could be
uncertain.
In the access arena, the industry
has not made great strides but not for
a lack of trying. The proposed new
micro-insurance legislation is therefore
very important for our industry and
will remain one of our priorities in
2009. Several issues, however, could be
addressed outside of the formal microinsurance legislation process to assist
companies in the low income market in
the meantime until such new legislation
can be enacted. One important example
is a potential FAIS category similar to
the assistance business category on
the life insurance side, for short-term
insurers, to assist them in addressing
this important new market. SAIA will
continue with its efforts, on behalf of the
industry, to find a way to address this
situation through discussion with the
FSB.
Image and reputation
Of course, all of the above issues directly
or indirectly affects the image and
reputation of the industry.
Outside issues that could possibly have
an effect on the image and reputation
of the industry will also form part of the
2009 agenda.
One such issue is the recent
reputational issues around the Inseta,
and specifically the concerns expressed
regarding FAIS credits.
It is quite clear that the year ahead
holds many exiting activities, issues,
debates and challenges. In addition, it is
to be expected that some yet unforeseen
challenges will surface to make the year
ahead an even more interesting one.
FAIS-related issues,
and specifically the
Post 2009 FAIS Fit and
Proper Requirements,
and the potential
effect of these on the
industry will become
increasingly top of mind
in 2009.
fourth quarter 2008
I FSB Bulletin
19
FSB Bulletin
fourth quarter 2008