Author: Gary Moore

Date: 14 November 2017

The Financial Services Laws General Amendment Act, 2013[1] is an omnibus statute[2] which[3] amended certain statutes that regulate financial services, including[4] the—

Pension Funds Act, 1956;[5]

Long-term Insurance Act, 1998;[6]

Short-term Insurance Act 1998;[7]

Financial Advisory and Intermediary Services Act, 2002;[8] and

Collective Investment Schemes Control Act, 2002.[9]

The Amendment Act’s provisions[10] came into operation on 28 February 2014.[11]

The explanatory memorandum to the Bill[12] had stated that the amendments include provisions that “directives”[13] would henceforth be published on an “official web site”[14] set up by the Financial Services Board,[15] “in order to reduce the costs associated with publication in the Government Gazette.”[16] (The Amendment Act accordingly amended the statutes to define “official web site” as a web site set up by the Board.[17])

Thus the Amendment Act inserted in[18] the Financial Advisory and Intermediary Services Act a provision about directives,[19] which states that the Registrar may, to ensure compliance with[20] the Act, issue a directive,[21] which may apply generally or be limited in application.[22] Where a directive is issued to ensure the protection of the public in general, the registrar must “publish” the directive “on the official web site,”[23] in order to “ensure” that the public may “easily and reliably access” the directive.[24]

The Amendment Act[25] included provisions that other measures[26] would also be published on the Board’s website.[27] For example, the Amendment Act altered the Financial Advisory and Intermediary Services Act’s provision governing exemptions:[28] It now provides that the Registrar[29] may[30] “by notice on the official web site” exempt any person[31] from any provision of the Act.[32] (Hitherto, exemptions would have been by Gazette notice.)

The Amendment Act also altered the provision in the Financial Advisory and Intermediary Services Act governing the lapsing of licences:[33] It now provides that the registrar must be advised[34] by the licensee[35] of the lapsing of a licence[36] and the reasons therefor,[37] and the registrar “may make known” any such lapsing by notice “on the official web site.”[38] (Before the Amendment Act, notice would have been in the Gazette.)

The public cannot readily access notices posted on the Board’s website:

To attempt to find[39] notices under the Financial Advisory and Intermediary Services Act of lapsed licences, a person must first go to the Board website,[40] then on its home page select and click on the link to “Departments,” then select (from a dropdown list of thirteen  departments) and click on the link titled “FAIS.”  The FAIS page[41] describes what the FAIS division’s four sections each do, lapsing of licences being the responsibility of “Supervision,” but while clicking on Supervision yields four dropdown links, none are about lapsed licences.

Clicking on a separate link called “Legislation” produces five dropdown links including “Board Notices” and “FAIS Notices.” Clicking on “Board Notices” reveals that it lists matters published in the Gazette; “FAIS Notices” lists matters posted on the website each year,[42] but none listing licences which had lapsed.

Yet the Board has stated that 459 licences lapsed in 2015, that 311 lapsed in 2016, and 421 in 2017.[43] One might conclude[44] that making known the lapsing of licences on the website is discretionary. (The Act states that the registrar “may” make known any such lapsing by notice on the official web site.[45])

As to exemptions from provisions of the Act, one can find on the website under “Exemptions”[46] only three notices by the registrar exempting persons[47] since the Amendment Act’s commencement, all of them in March 2014.[48]

However, numerous such exemptions can be discovered on the website, yet oddly not under “Exemptions,” but among the sundry “FAIS Notices.”[49]

The Amendment Act also altered the Insurance Acts[50] so as to provide for the posting of measures on the Board’s website:[51]

Thus the Long-term Insurance Act now provides[52] that,[53] if an insurer[54] ceases entering into policies[55] to such extent that its continued registration[56] is no longer justified,[57] and[58] the Registrar is satisfied that it will not resume entering into policies to the required extent in a reasonable time,[59] the Registrar must[60] prohibit the insurer[61] from entering into further policies and require it to make arrangements[62] to discharge its obligations under all policies hitherto,[63] and thereafter[64] must cancel its registration, by notice “on the official web site.”[65] (Before the Amendment, cancellation would have been by notice in the Gazette.[66])

The Amendment Act similarly amended the Pension Funds Act[67] and the Collective Investment Schemes Control Act[68] to require the posting of measures on the Board website.

Though not amended by the Amendment Act, the Financial Markets Act, 2012[69] also requires the posting of measures on the Board website.[70] Other provisions of the Financial Markets Act require notices to be published in “two national newspapers”[71] and[72] the official website.[73]

These require at least a newspaper (or Gazette) announcement, that the relevant information may be found on the Board website. But these announcements are of little help: They mention only the Board website’s homepage address.[74] The public still have the hit-or-miss task of navigating through the website to find a page that may contain the information.

(The Financial Sector Regulation Act, 2017[75] will[76] require information[77] that in terms of the statutes must be published[78] to be included also[79] in a “Financial Sector Information Register” which the Treasury will maintain[80] in electronic form.[81])

The statutes do not require all measures under the statutes to be posted on the website: Fit-and-proper requirements, codes of conduct or regulations are determined, published or made[82] by notice in the Gazette.[83] Draft Regulations are also published commonly for public comment in the Gazette. (Thus the Insurance Acts[84] provide that, before regulations are made by the Minister,[85] the Minister must publish the draft Regulations for comment “in the Gazette.”[86])

But now, drafts of Rules to be made under the Insurance Acts get posted for comment on the Board website (the Registrar may, by notice in the Gazette, make policy-holder-protection Rules[87] aimed at ensuring for the purpose of policyholder protection that policies are entered into in accordance with sound insurance principles,[88] in the interests of the parties and “the public interest generally”[89]):

In spite of such Rules’ public-interest character, the Insurance Acts[90] now say the Registrar must merely, before prescribing a rule, publish in the Gazette notice of “the release of” a draft rule, with an indication that it is available for comment “on the official web site.”[91]

(The Financial Markets Act follows this procedure for Regulations too.[92])

All the above statutory provisions, authorising the posting of statutory measures on the Board website, violate the Rule of Law:

The Amendment, by amending the statutes to authorise the posting of measures on the Board website, but without[93] defining how the notices should be posted there, in effect leave the manner in which the Board can post them on the website to the Board’s discretion. This violates the principle of the Rule of Law that discretions should be narrowly defined.[94]

The statutes, by authorising the posting of statutory measures on a website in this way, violate the principle of the Rule of Law that the law must be accessible. If everyone is bound by the law, they should be able without undue difficulty to find out what it is.[95]

The Board, by maintaining a website of labyrinthine complexity and difficulty of navigation, violates the principle of the Rule of Law that public officers and bodies should exercise the powers conferred on them reasonably.[96]

Government Gazettes are published by the Government Printing Works,[97] which describes the Gazettes as “official communication tools to the general public.” The Government Printing Works typesets, prints and disseminates Gazettes in hard copy,[98] and then publishes them electronically.[99]

It may be that publication in an official government newspaper can be costly.[100] And it may be true that publication in the Gazette is not a deemed notice to the whole world of the information published, such that knowledge of it can be imputed to everyone.[101] And it may be that the readership of the Government Gazette is in practice relatively narrow.

Yet the Gazette is (or was[102]) the single recognised source of official public notices:

The man in the street does not make a habit of accessing the different websites of different state organs and government departments, and of searching through them to ascertain whether any notice which may be relevant or useful to him has recently been posted on one or other webpage there.[103]

Even if an ordinary member of the public does access the Financial Services Board website, she is confronted by the task of having to search through the website, more-or-less  haphazardly, to find a relevant webpage.

It might be argued that a move away from the publishing of official notices in full in the Gazette is inevitable, and that the Rule of Law could be served if government bodies publish at least brief notices in the Gazette stating that named measures have been posted on the body’s website and can be directly accessed there on a specifically-identified webpage.[104]

But material on websites[105] is at risk of being hacked[106] and illicitly altered.[107]

It can therefore fairly be said that the posting of official notices on websites, insofar as this puts the material at risk of hacking and alteration, violates the principle of the Rule of Law that legal measures ought to be clear and predictable.[108] The quality of information published by the government should be reliable.[109]

One is compelled to conclude that the Rule of Law only can be served properly in this regard, by the continued publication of official material in an unassailably secure form, such as is[110] provided by the current, primarily hard-copy, Government Gazettes.

[1] Financial Services Laws General Amendment Act 45 of 2013 (“the Amendment Act”).

[2] Parliament, Finance Standing Committee, 12 Mar 2013: Workshop: Financial Services Laws General Amendment Bill [B29-2012]. Parliamentary Monitoring Group, https://pmg.org.za/committee-meeting/15567/ (accessed 5 Nov 2017).

[3] Inter alia.

[4] Inter alia.

[5] Pension Funds Act 24 of 1956.

[6] Long-term Insurance Act 52 of 1998.

[7] Short-term Insurance Act 1998 53 of 1998.

[8] Financial Advisory and Intermediary Services Act 37 of 2002.

[9] Collective Investment Schemes Control Act 45 of 2002.

[10] Relating to the applicable amendments of those statutes.

[11] Govt Notice 120 of 18 Feb 2014, Commencement of Financial Services Laws General Amendment Act, 2013.

[12] Financial Services Laws General Amendment Bill B29—2012 (which became the Amendment Act).

[13] And exemptions.

[14] And be tabled as part of the Financial Services Board’s annual report to Parliament.

[15] Hereinafter the “Board.”

[16] Memorandum on the Objects of the Financial Services Laws General Amendment Bill, 2012, par 3.5.

[17] E.g., Financial Advisory and Intermediary Services Act s 1(1) svv “official web site,” “Board.”

[18] Inter alia.

[19] Financial Advisory and Intermediary Services Act s 38C (“Directives”).

[20] Or prevent a contravention of.

[21] To a person or persons to whom the Act applies. Financial Advisory and Intermediary Services Act s 38C(1).

[22] To a particular person or category of persons. Financial Advisory and Intermediary Services Act s 38C(2).

[23] And any other media that the registrar deems appropriate.

[24] Financial Advisory and Intermediary Services Act s 38C(5).

[25] Apart from what the explanatory memorandum intimated was in the Bill.

[26] I.e., measures other than directives and exemptions.

[27] Reportedly the programming committee of the National Assembly determined that the Bill would pass its second reading without a debate in the Assembly. Business Day, 31 Oct 2013 (Linda Ensor), “DA ‘outraged’ by refusal to debate bill.”

[28] Financial Advisory and Intermediary Services Act s 44 (“Exemptions by registrar and Minister”).

[29] In any case not provided for in the Act.

[30] On application or on the Registrar’s own initiative, and on reasonable grounds.

[31] Or category of persons.

[32] Financial Advisory and Intermediary Services Act s 44(4)(a).

[33] Financial Advisory and Intermediary Services Act s 11 (“Lapsing of licences”).

[34] In writing.

[35] Or any key individual of the licensee, or another person in control of the affairs of the licensee.

[36] Of a financial-services provider. Financial Advisory and Intermediary Services Act s 1(1) sv “licence” read with s 7(1)(a).

[37] A licence lapses if the licensee (if a natural person) is permanently incapable of carrying on any business due to physical or mental disease or serious injury, is finally sequestrated or dies; or (if not a natural person) is finally liquidated or dissolved; or if the business of the licensee becomes dormant; or if the licensee voluntarily and finally surrenders the licence to the registrar. Financial Advisory and Intermediary Services Act s 11(1).

[38] And “if necessary” by means of any other appropriate public media announcement. Financial Advisory and Intermediary Services Act s 11(2).

[39] For example.

[40] Financial Services Board, Home page, https://www.Board.co.za/Pages/Home.aspx.

[41] Financial Services Board: Departments: Financial Advisory and Intermediary Services: About us: What we do. https://www.Board.co.za/Departments/fais/Pages/AboutUs.aspx .

[42] In 2017 some 143 FAIS Notices had been posted by 7 November.

[43] Financial Services Board, 2017 Annual Report, p. 45.

[44] Correctly or not.

[45] And “if necessary” by means of any other appropriate public media announcement. Financial Advisory and Intermediary Services Act s 11(2).

[46] By following these links: Financial Services Board: Departments: Financial Advisory and Intermediary Services: Legislation: “Exemptions.”

[47] Government Gazette 37438 of 14 Mar 2014:

Board Notice 29 of 2014: Financial Services Board: Financial Advisory and Intermediary Services Act, 2002: Exemption of particular persons from the level 1 regulatory examination (No. 1 of 2014);

Bd Notice 30 of 2014: do.: do.: Particular exemption from fees payable to Registrar (No. 1 of 2014);

Bd Notice 31 of 2014: do.: do.: Exemption of particular persons from qualification requirements (No. 1 of 2014).

These three Notices had been published in the Gazette, despite the amendment to the Act that the registrar grants exemptions by notice on the website.

[48] A bare two weeks after coming into force of the Amendment Act authorising posting of such notices on the website.

[49] By following these links: Financial Services Board: Departments: Financial Advisory and Intermediary Services: Legislation: “FAIS Notices.”

(Exemptions before March 2014 can be found on the website among “Board Notices.”)

[50] Long-term Insurance Act; Short-term Insurance Act.

[51] Long-term Insurance Act ss 4(4)(f), 13(2) and (3), 15(3) and 51, read with s 1(1) svv “official web site.”

Short-term Insurance Act ss (4)(f), 8(3), 13(2) and (3) and 15(3), read with s 1(1) svv “official web site.”.

[52] For example.

[53] Inter alia.

[54] I.e., a long­term insurer.

[55] I.e., long­term policies.

[56] As an insurer.

[57] I.e., as a long­term insurer.

[58] After allowing that insurer at least 30 days in which to make representations in respect thereof.

[59] Or if an insurer notifies the Registrar of its intention to cease entering into policies and so requests.

[60] By notice.

[61] With effect from a date specified in the notice.

[62] Satisfactory to the Registrar.

[63] Before the specified date.

[64] I.e., when the Registrar is satisfied that the insurer no longer has obligations under any such policy.

[65] And to the insurer. Long-term Insurance Act s 13(2)(a) and (b), as amended by the Amendment Act.

[66] And to the insurer.

[67] Pension Funds Act ss 2(5)(b), 6(4) and 33A(6), read with s 1(1) svv “official web site.”

[68] Collective Investment Schemes Control Act ss 5(1)(b) and 15B(5), read with s 1 svv “official web site.”

[69] Financial Markets Act 37 of 2012.

[70] Financial Markets Act ss 71(5)(a) and 84(2)(e).

[71] Or, in some instances, in one national newspaper, and in certain cases “at the expense of the applicant.”

[72] In some cases.

[73] Financial Markets Act ss 7(4)(a), 9(4)(a), 27(4)(a), 29(4)(a), 47(4)(a), 49(4)(a), 54(4)(a), 56(6)(a), 82(5)(a).

But not in the Gazette.

[74] I.e., www.fsb.co.za .

[75] Financial Sector Regulation Act 9 of 2017.

[76] When it comes into operation.

[77] Other than draft documents.

[78] Including by publication the Gazette (or, presumably, a newspaper).

[79] Without preventing posting of the information on a website. Financial Sector Regulation Act s 287(1)–(3).

[80] To provide “reliable access” to information relating to financial-sector statutes and regulatory instruments and their implementation. Financial Sector Regulation Act s 257.

[81] “[I]n a way that facilitates access and searching of the Register by members of the public.” Financial Sector Regulation Act s 259(2).

[82] As the case may be.

[83] And amended in like manner. See, for example, Financial Advisory and Intermediary Services Act s 6A(1) and (4) (fit-and-proper requirements); s 15(1)(b) and (3) (codes of conduct); and ss 26(2)(b) (rules) and 35(1) (regulations) both read with Interpretation Act 33 of 1957 s 10(3).

[84] For example.

[85] The Cabinet member responsible for finance. Insurance Acts s 1(1) svv “Minister.”

[86] Long-term Insurance Act s 72(2B); Short-term Insurance Act s 70(2B).

[87] Long-term Insurance Act s 62 (“Protection of policyholders”); Short-term Insurance Act s 55 (“Protection of policyholders”).

[88] And practice.

[89] Long-term Insurance Act s 62(1)(a); Short-term Insurance Act s 55(1)(a).

[90] After amendment by the Amendment Act.

[91] Long-term Insurance Act s 62(1)(a); Short-term Insurance Act s 55(4)(a)(i).

[92] Financial Markets Act s 107(2)(a)(iii), read with s 1(1) svv “official website.”.

[93] In most instances.

[94] Lord Bingham (then Senior Law Lord), “The Rule of Law” (Sixth Sir David Williams Lecture 2006, Centre for Public Law, Univ. of Cambridge), second sub-rule.

[95] Even if that means taking advice (as it usually will). Bingham, “The Rule of Law” (supra), first sub-rule.

[96] Bingham, “The Rule of Law” (supra), sixth sub-rule.

[97] The Government Printing Works is a national-government public-service component; its principal government department is the Department and its executive authority the Minister for Home Affairs: Public Service Act, 1994 (Proc 103 of 1994) s 7(2)(a) read with Sched 1 col 1; s 7(2)(c) read with Sched 3 Pt A col 1 and s 1 svv “national government component;” s 7(3)(a) read with Sched 3 Pt A cols 2 and 3; s 1 svv “principal department,” “department,” “national department;” s 1 svv “executive authority” par (b).

[98] Some weekly and others monthly.

[99] Government Printing Works website, “Gazettes: Gazette services,” http://www.gpwonline.co.za/Gazettes/Pages/default.aspx (accessed 3 Nov 2017).

[100] Wisconsin Legislative Reference Bureau, “Giving Notice: Publication of Government Activities in the Internet Age” (D Ritsche) Dec. 2015, Legislative Report, 15-1, p. 8 (“Arguments”).

[101] Official Custodian for Charities and others v Parway Estates Developments Ltd [1984] 3 All ER 679 (CA) 685.

[102] At least until the Amendment Act.

[103] Still less would members of the public subscribe for each government agency’s new notifications. (The Financial Services Board, for example, has a facility enabling a person to subscribe for its new documents and publications.)

[104] And arguably the cost of using the Gazette, even for this proposed narrow purpose, could be even further reduced if the Gazette were to become primarily an electronic publication, with a search function, and proper indexing at least as usable as, and preferably better than, the indexing of the present, print-based, Gazette.

[105] Apparently even “secure” websites.

[106] The Guardian, 10 Oct 2017, “Deloitte hack hit server containing emails from across US government,” N Hopkins, https://www.theguardian.com/business/2017/oct/10/deloitte-hack-hit-server-containing-emails-from-across-us-government (accessed 14 Nov 2017).

[107] Polity, 25 Sep 2013, “Government Gazette vs Official web site,” A Bodiat (Norton Rose Fulbright), http://www.polity.org.za/article/government-gazette-vs-official-web-site-2013-09-25 (accessed 14 Nov 2017).

[108] Bingham, “The Rule of Law” (supra), first sub-rule.

[109] World Justice Project, “What is the Rule of Law?” Factor 3: Open Government. Sub-factor 3.1: “Publicized laws and government data,” https://worldjusticeproject.org/our-work/wjp-rule-law-index/wjp-rule-law-index-2016/factors-rule-law/open-government-factor-3 (accessed 14 Nov 2017).

[110] Apparently.

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Gary Moore

Gary Moore BA LL.B. (Witwatersrand) LL.M. (UC London) is a South African lawyer and Senior Researcher at the Free Market Foundation.

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