FSB and the life com­pa­nies

Weekend Argus (Saturday Edition) - - FRONT PAGE -

The Fi­nan­cial Ser­vices Board (FSB) does not reg­u­late as­sur­ance prod­ucts; its su­per­vi­sion of life as­sur­ers is fo­cused on pru­dence and mar­ket con­duct, as op­posed to prod­ucts, Jo-Ann Fer­reira, the head of the FSB’s in­sur­ance reg­u­la­tory frame­work de­part­ment, says.

Fer­reira says no reg­u­la­tions or re­stric­tions gov­ern the un­der­ly­ing funds that an as­surer may in­clude in a linked in­vest­ment pol­icy, which is a pol­icy where the ben­e­fits, such as the re­turns, are not guar­an­teed but are de­ter­mined solely by the value of the as­sets spec­i­fied in the pol­icy. “The pol­i­cy­holder there­fore car­ries the full in­vest­ment risk re­lated to the pol­icy,” she says.

“The un­der­ly­ing in­vest­ments are con­trac­tu­ally agreed be­tween the as­surer and the pol­i­cy­holder. In other words, the pol­icy con­tract sets out the par­tic­u­lar as­sets or cat­e­gories of as­sets ac­cord­ing to the def­i­ni­tion of linked pol­icy in the Long Term In­sur­ance Act.

“How­ever, any ad­vice pro­vided to you when in­vest­ing in an en­dow­ment pol­icy is sub­ject to the Fi­nan­cial Ad­vi­sory and In­ter­me­di­ary Ser­vices Act,” Fer­reira says.

She says the FSB will, how­ever, shortly con­sult on amend­ments to the Pol­i­cy­holder Pro­tec­tion Rules un­der the Long Term In­sur­ance Act, which will “sig­nif­i­cantly im­prove the prod­uct de­sign, mar­ket­ing, and dis­clo­sure re­quire­ments with which as­sur­ers must com­ply. These re­quire­ments, once en­acted, will go a long way to­wards mit­i­gat­ing against the un­fair treat­ment of pol­i­cy­hold­ers.”

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