2020 INTEGRATED REPORT

2. FINANCIAL INSTITUTIONS: PRUDENTIAL STANDARDS A new joint standard, setting out the criteria that must be met by significant owners in order to be considered fit and proper, has been published by the Financial Sector Conduct Authority (FSCA) and the Prudential Authority (PA). The joint standard provides, among others, for: (a) the roles and responsibilities of financial institutions and significant owners of financial institutions; (b) the fit and proper requirements for significant owners where they are both natural persons, as well as juristic persons; and (c) the matters to be considered when assessing the fitness and propriety of significant owners. The impact of the Joint Standard is rated as medium, as PPS already has policies in place managing the fit and proper status of significant owners. In June 2020 the PA, in accordance with section 98 of the Financial Sector Regulation Act, 2017 (Act No. 9 of 2017) (FSR Act) published draft Prudential Standards on audit requirements for entities registered in terms of the Insurance Act, 2017 (Act No. 18 of 2017), together with accompanying documents as required under the FSR Act. In addition, the PA published a draft Guidance Notice to guide insurers on how to comply with the requirements of the draft Prudential Standards. The PPS Group submitted its comments to ASISA on 25 June 2020. One part of the comments was directed at Insurers and the other at Insurance Groups. As management does not believe that the PPS Group will have difficulty complying with the Standard, the impact is rated as Medium. 3. MARKET CONDUCT ~ As part of the FSCA’s Market Conduct Framework, the PPS Group reviewed the FSCA’s Second Draft Conduct of Financial Institutions Bill 2018 (COFI Bill) In October 2020 the National Treasury published for comment a second draft of the COFI Bill, that will regulate the conduct of financial institutions. One of the main changes was the removal of the enabling provisions of conduct standards which will be included in the FSR Act. The impact of the Bill on the PPS Group is high, as it will introduce new standards. ~ The FSCA has invited comments on the Retail Distribution Review (RDR) – Categorisation of Financial Advisers and Related Matters Discussion Document. The purpose of the document is to provide an update, and invite stakeholder views, on the FSCA’s updated thinking on various practical implications of the 2-tier adviser categorisation and related RDR proposals. The PPS Group has submitted comments on these suggestions and the impact is rated as high. A change to the description of an “independent” financial advisor and to those advisors employed by PPS could impact furnishing of advice and intermediary services. ~ Amendments to the Fit and Proper requirements were published and became effective on 26 June 2020. The amendments were primarily introduced to align the terminology in these requirements to the Insurance Act, and the Long-term and Short-term Insurance Acts. However, in addition to these, there are a few key changes that Financial Services Providers (FSPs) should be aware of. Those are mainly that CPD can only be provided by a Professional Body if the activity is verifiable and FSPs cannot appoint an unrehabilitated insolvent person. 4. PROTECTION OF PERSONAL INFORMATION During December 2018 the Information Regulator, under section 112(2) of the Protection of Personal Information Act 4 of 2013 (POPIA), published new regulations relating to the protection of personal information. The regulations provide for procedures regarding, among others: a. the objection to the processing of personal information; b. the request for correction or deletion of personal information or destruction or deletion of records of personal information; c. additional responsibilities of information officers; d. the submission of complaints and assessments. Certain sections of POPIA have been proclaimed to take effect on 1 July 2020 and 30 June 2021, respectively. The Act has been put into operation incrementally, with several sections of the Act having been implemented in April 2014. The sections which commenced on 1 July 2020 are essential parts of the Act and comprise sections which pertain to, among others, the conditions for the lawful processing of personal information; the regulation of the processing of special personal information; Codes of Conduct issued by the Information Regulator; procedures for dealing with complaints; provisions regulating direct marketing by means of unsolicited electronic communication and general enforcement of the Act. The initial impact of these amendments is rated as high, as the PPS Group is currently reviewing controls to ensure that direct marketing and processing of personal information is performed in line with POPIA. CORPORATE GOVERNANCE REPORT | 85