A mixed bag of advice

The CoFI Bill delayed

By Bruce Cameron
Co-author to The Ultimate Guide to Retirement in South Africa

 

The CoFI Bill delayed – yet again – and more law required

 

It is time for legislators to get moving – they need to pass vital Conduct of Financial Institutions (CoFI) Bill, introduce legislation for an ‘enduring power of attorney, and dramatically slow down gambling.

CoFI bill alone is letting product suppliers run rings around you as a customer.

The Cofi Bill was first was provided for public comment in 2018. Since then, it has been checked and rechecked by the financial sector industry and National Treasury. Every six months the National Treasury says the CoFI Bill will come before Parliament. Now it is being postponed again.

CoFI is an essential piece of legislation designed to hold the financial sector accountable, especially regarding how it treats its customers. And this is made worse how they virtually ignore customers with serious vulnerabilities, while claiming they are treating customers fairly.

The National Treasury says it hopes to get Cabinet approval before the end of this year and bring it to Parliament next year.

This is not the only legislation problem. There is also this:

 

Dementia

Urgently required is what is called an ‘enduring/continuing power of attorney’. The problem is that, at the moment, if you suffer from diminished mental capacity, no power of attorney will have an effect on your financial future.

You may think, anticipating dementia, or any other mental incapacity, that you have given a power of attorney to your partner, children, your attorney or anyone else, will be effective. It is not!

The power of attorney is no longer valid if you are of unsound mind and incapable of managing your own affairs

The easiest way to resolve this would be to have what is called an ‘enduring power of attorney’. This would allow those you trust to look after you financially. But South Africa has not followed the lead of many other countries. It has been under discussion in South Africa. Thirty-seven years ago, the South African Law Commission, recommended that an ‘enduring power of attorney’ be legislated. It was urgent then, but even more so now as people live for longer and more people are suffering from dementia or other mental diseases.

But no seem to take responsibility for it. The Department of Justice does not reply to emails, the ANC and the Democratic Alliance also do not reply to emails.

Clearly nothing is happening. The consequences are that numerous other ways are being used, including other more complicated legal steps or some that can result in scams. An ‘enduring power of attorney’ is really the best solution for most.

 

Why the CoFI Bill is important

The CoFI bill will allow the market regulator, the Financial Sector Conduct Authority (FSCA), to improve the way financial institutions treat their customers by fully implementing the six outcomes of Treating Customers Fairly (TCF). In terms of the six outcomes, financial institutions must treat you fairly.

Treating Customers Fairly is based on six outcomes. They are:

• Customers can be confident they are dealing with firms where TCF is central to the corporate culture.

• Products and services marketed and sold in the retail market are designed to meet the needs of identified customer groups and are targeted accordingly.

• Customers are provided with clear information and kept appropriately informed before, during and after point of sale.

• Where advice is given, it is suitable and takes account of customer circumstances.

• Products perform as firms have led customers to expect, and service is of an acceptable standard and as they have been led to expect.

• Customers do not face unreasonable post-sale barriers imposed by firms to change products, switch providers, submit claims or make complaints.

 

Some good news

At least someone is doing something about the enormous growth in gambling in South Africa. More than R1,1 trillion was gambled in South Africa over the past year. Now the National Treasury has proposed a 20% percent tax on online betting. This will be on top of R2,4 billion in provincial and other gambling taxes. The new tax could be expected to raise an additional R10 billion.

But expect a rough ride as many parties in Parliament receive generous donations from the tax industry.

Gambling is quite simply destroying people lives; wrecking long-term investment gains, such as retirement; increasing levels of debt; minors openly gambling; and, contributing to the divorce rate, with money that should be spent on food and school fees been, spent on gambling.

 

‘Take care’

Scams have always been a major problem. They are now even worse with electronic fraud and artificial intelligence. You can now almost take it for granted that many of your personal details are now available to scamsters. This means you need to be very careful when you respond to anything from an email or telephone call telling you to update banking, medical aid or insurance details, to even responding to a telephone call from a ‘relative’ asking for urgent help (AI could result in the replication of the voice).

The number of complaints dealt with by FSCA climbs almost daily. And the problem is that often the scam has taken place and recovering the money may be difficult.

Do not reply to any email or telephone call asking for any of your details, particularly relating to your bank or investments. And be very, very careful in paying for anything ordered over the internet.

There is a lot more detail on this in the book, The Ultimate Guide to Retirement in South Africa. For more information on how to purchase the book go to Buy Now on the website  www.retirementplanning.co.za

 

Read more on this topic here:

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Why retiring at 60 could be the most expensive mistake of your life - The Ultimate Guide to Retirement in South Africa

Why a one size fits all retirement plan could be your biggest risk - Ascor® Independent Wealth Managers

Why good intentions won’t save your retirement  but this will - Ascor® Independent Wealth Managers

Five retirement mistakes that could cost you your financial freedom - Ascor® Independent Wealth Managers