AUGUST 2018 GROUP KI DISCUSSION GROUP KI DISCUSSION

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AUGUST 2018 GROUP KI DISCUSSION

AUGUST 2018 GROUP KI DISCUSSION

GROUP KI DISCUSSION Discussion topics: 1. KI Submissions to FSCA 2. Disclosure Requirements 3

GROUP KI DISCUSSION Discussion topics: 1. KI Submissions to FSCA 2. Disclosure Requirements 3 Disclosure Documents, Policy Wordings and Brochures 4. Free Insurance

KI Submissions to FSCA Section 52(11) of the F&P Requirements: A key individual must

KI Submissions to FSCA Section 52(11) of the F&P Requirements: A key individual must — a) within six months after commencement of this Notice inform the Registrar of the classes of business it currently manages and oversees in respect of all FSPs for which it is approved; and b) submit the information referred to in paragraph (a) in the manner and format prescribed by the Registrar. The 6 month period ends on 30 September 2018 The manner and format prescribed by the Registrar is the completion of form FSP 4 d

KI Submissions to FSCA 11. Operational Ability of Key Individuals Provide the following information:

KI Submissions to FSCA 11. Operational Ability of Key Individuals Provide the following information: No. Question Yes No 1. Are you able to maintain the operational ability to fulfil the responsibilities imposed by the Act? 2. Are you permanently employed by the FSP in respect of which approval is sought? 3. Are you approved as a key individual of more than one FSP or juristic representative 4. Are you appointed as a representative of an FSP other than the FSP in respect of which this application is sought? 5. If the answer to question 3 and/or 4 is yes, please indicate whether the FSPs are aware that you – (a) are approved as a key individual or seek approval as a key individual of more than one FSP or juristic representative; and/or (b) are appointed or seek appointment as a representative of another FSP. 6. If the answer to question 3 and/or 4 is yes, provide a matrix reflecting the(a) number of FSPs per category; (b) juristic representatives per Category of FSP; (c) number of representatives per Category of FSP; and (d) number of business premises, business units and branches per province (including internationally) and per FSP and representative referred to in (a), (b) and (c), that you manage or oversee and that you intend to manage or oversee. 7. If the answer to question 2 is no or the answer to question 3 or 4 is yes, please demonstrate to the Authority that you have the operational ability to fulfil your functions. 8. Confirmation signed by both the FSP in respect of which approval is sought and the person seeking approval as key individual that he/she has the ability, capacity and required decision making powers to actively and effectively manage or oversee the activities of the FSP relating to the rendering of financial services.

Disclosure Requirements Information to be disclosed in 3 phases as follows: Phase 1: Prior

Disclosure Requirements Information to be disclosed in 3 phases as follows: Phase 1: Prior to any transaction taking place Phase 2: Immediately after the transaction Phase 3: Ongoing and at renewal

Disclosure Requirements Prior to any transaction taking place (Slide 1 of 2) • the

Disclosure Requirements Prior to any transaction taking place (Slide 1 of 2) • the nature and extent of policy benefits, including, where applicable, when the insurance cover begins and ends and a description of the risk insured by the policy; • concise details of all of the following – Ø any commission or remuneration payable to any intermediary or binder holder in relation to the policy, and the recipient thereof (including dividends from cell-captive ownership); Ø any excesses that may become payable by the policyholder, the circumstances under which it will be payable and the consequences of not paying; Ø what cooling-off rights are offered and procedures for the exercise thereof; Ø concise and prominent details of any significant exclusions or limitations; • in respect of premiums – Ø the premium that is payable under the policy; Ø the frequency at which the premium is payable; and Ø the implications of a failure to pay a premium; • the type of policy and a general explanation of the relevant policy;

Disclosure Requirements Prior to any transaction taking place (Slide 2 of 2) • where

Disclosure Requirements Prior to any transaction taking place (Slide 2 of 2) • where a policy is entered into in connection with other goods or services (a bundled product), the premium payable in respect of the insurance policy must be disclosed separately from any other prices and must state whether entering into the policy is a prerequisite for entering into / being eligible for any other goods or services; • in the event of a credit life policy must disclose to the policyholder whether the policy is a mandatory or optional credit life insurance policy and the difference between the two; • the existence of any circumstance that could give rise to an actual or potential conflict of interest in dealing with the policyholder; • any obligation to disclose material facts, including information to ensure that a policyholder knows what must be disclosed as well as the consequences of non-compliance with the obligations; • where applicable, the right to request recordings of any telephonic disclosures; and • the right to complain, including details on how and where to complain and the contact details of the insurer and contact details of the relevant Ombud;

Disclosure Requirements Immediately after the transaction (Slide 1 of 2) • All information provided

Disclosure Requirements Immediately after the transaction (Slide 1 of 2) • All information provided prior to inception, in writing, to the extent that any such information has not already been provided in writing (in the quotation or similar communication); • A copy of the policy wording; and • The following key information: Øevidence of cover; Øthe timing and manner in which the policy benefits will be made available to the policyholder / beneficiary; Øcomprehensive details of all of the following, where applicable, (including the amount and frequency, the recipient, the purpose and the manner of payment – - any charges or fees to be levied against the policy or the premium; - any commission or remuneration payable to any intermediary or binder holder in relation to the policy; and - any excesses that may become payable by the policyholder and the circumstances under which it will be payable and the consequences of not paying;

Disclosure Requirements Immediately after the transaction (Slide 2 of 2) • comprehensive details of

Disclosure Requirements Immediately after the transaction (Slide 2 of 2) • comprehensive details of any restrictions on access to policy benefits and any penalties for early termination or withdrawal from or transfer of the policy; • Prominent details of any significant exclusions or limitations; • any obligation to monitor cover, and that the policyholder may need to review and update the cover periodically to ensure it remains adequate; • any right to cancel, including the existence and duration of, and any conditions relating to, the right to cancel; • the right to claim benefits, including conditions under which the policyholder can claim and the contact details for notifying the binder holder of a claim; • any requirement to make an election during the duration of the policy; and • details of representations made by or on behalf of the policyholder to the insurer which were regarded by that insurer as material to the assessment of the risks under the policy.

Drafting new Brochures 1. 2. 3. 4. Must include everything required as per disclosures

Drafting new Brochures 1. 2. 3. 4. Must include everything required as per disclosures to be made prior to transaction; The Insurer MUST sign it off before publication; The Insurer must also sign off any such marketing page(s) in the dealership’s website; If the insurer produces and prints the brochures, all old brochures that do not adhere to the new disclosure requirements must be returned or destroyed by the end of 2018

Disclosure Documents The following documents must be given to the client: • The dealership’s

Disclosure Documents The following documents must be given to the client: • The dealership’s disclosure document (welcome letter/SLA perhaps? ) • The administrator’s disclosure document (may be more than one administrator) • The insurer’s disclosure document (may be more than one insurer) • The policy wording (may be more than one policy) These can be combined where appropriate

Policy Documents The following must be included: • • Key Information (by end of

Policy Documents The following must be included: • • Key Information (by end of 2018) Cooling off rights (by end of 2018) Periods of Grace (immediate) New Termination Conditions (end of 2019)

Free Insurance Section 44 of the STIA provides as follows: "Unless done in accordance

Free Insurance Section 44 of the STIA provides as follows: "Unless done in accordance with the rules made under section 55, no person shall provide or offer to provide, directly or indirectly, any valuable consideration as an inducement to a person to enter into, continue, vary or cancel a shortterm policy other than a reinsurance policy. "

Free Insurance The key features of the MB offering 1. 2. 3. 4. 5.

Free Insurance The key features of the MB offering 1. 2. 3. 4. 5. 6. 7. 8. Mercedes-Benz SA ("MBSA") wishes to increase motor vehicle sales In order to do so MBSA wishes to offer customers a discount on the purchase price of the vehicle in respect of customers who finance the purchase of the vehicle through Mercedes-Benz Financial Services ("MBFS"). Both MBSA and MBFS retains an interest in the vehicle whereby a. MBSA as manufacturer is contractually obliged to trade in the vehicle at the guaranteed future value ("GFV") promised by MBSA at a certain point in time; and b. MBFS provides financing for the sale of the vehicle. Due to the interests that both MBSA and MBFS retains in the vehicle, it contractually agrees that MBSA will provide a R 40 000 discount on the purchase price of the vehicle, which discount can be applied in one of two ways, namely – a. Towards a reduction in the interest rate offered by MBFS; or b. As a contribution towards the first year of premiums with an insurer who is on MBSA's panel of insurers, to ensure that the GFV is not diminished by the use of grey parts by non-panellist insurers. The rationale is purely to enhance the sale of vehicles and through such enhancement to ensure that the interests of MBSA and MBFS are entrenched in the product offering. The client is induced solely to purchase a vehicle at a discounted rate. The client is not induced to enter into a policy as the client always has a choice between using the discount towards a. a reduction in the interest rate; or b. payment of the premiums. Should the client wish to add the vehicle to his/her existing insurance policy, or to conclude a policy with a different insurer, he/she can do so and opt to utilise the discount towards the interest rate.

THAT’S IT FOR TODAY - DRIVE SAFE

THAT’S IT FOR TODAY - DRIVE SAFE