MoneyMarketing August 2017 by New Media B2B

NEWS & OPINION

31 August 2017

EDITOR’S NOTE Continued from page 1

Professor Vivian suggests that Government rethink the policy, “before yet another important private sector is damaged and another disastrous economic policy is adopted,” disputing the claim that the Bill represents international best practice. “The Twin Peaks model already exists in practice, introduced by the Financial Advisory and Intermediary and Services Act 37 of 2002 (FAIS), but under a single peak, rather that the proposed expensive and grossly inefficient split into two peaks under the FSRB.” Twin Peaks will compound and exacerbate the problems and be an enormous waste of resources, he says. “Britain and Australia have been experimenting with it and Holland has piloted a different version. Not a single other country has tried it.”

THE BILL ALSO HAS ‘SEVERE CONSEQUENCES FOR TRANSFORMATION, FOR EMPLOYMENT AND FOR CONSUMERS OF INSURANCE’ He claims that both the National Treasury and FSB have failed to give clarity on why the legislation is necessary when its stated objectives can and are being achieved under current, simpler legislation. “Insurance, which is one of SA’s oldest, most established and most economically necessary private sector functions, has been unnecessarily lumped in with banking and other financial services.” FMF Executive Director, Leon Louw maintains that the regulation will hamper transformation in the industry and further encourage concentration into a few large firms instead of many smaller, more competitive insurance houses, agents and brokers. This is the opposite of what is intended: the creation of monopolistic conditions.

The FMF believes that Twin Peaks was put forward as a solution for a problem that has yet to be identified, researched, analysed or quantified. The organisation is particularly concerned about the Cabinet mandated Social Economic Impact Assessment (SEIA) that was produced. “A SEIA is required to precede all new policy. The SEIA produced was grossly inadequate and misleading; in fact, a case study in precisely how not to produce such an assessment.” The FMF believes that the FSRB will cost R4.8 billion per annum1, although “no evidence has been provided that any additional benefit will derive from the billions spent.” It also thinks that the Bill will create an expanding enormous regulatory bureaucracy while not providing a new or different approach. “The Bill stifles innovation, reduces consumer choice and access to low cost advice. It also reduces competition – the opposite of the intention.” 1 The FMF believes that this is the equivalent of 500 000 RDP houses or 5 000 new clinics per year, every year.

Robert Vivian, Insurance Professor, Wits School of Economics and Finance

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don’t know about you, but I’m certainly tired of hearing about Bitcoin. Not a day goes by without me receiving an email about the cryptocurrency and how buying it will change my life. I’ve never believed the Bitcoin hype: “It’s a totally revolutionary concept – a decentralised money system! Transactions are made without middle men, there is no transaction fees and you don’t have to give your real name!” So what? And why would I want to risk moving money from rand into Bitcoins just to save a tiny amount on transaction fees? We’re also told that according to the Bitcoin protocol, only 21 million Bitcoins can be created. There are currently about 15 million in existence. Yet, these coins can be divided into smaller parts right down to one hundred millionth of a Bitcoin. While the price of Bitcoin may have significantly increased, one gets the impression that the cryptocurrency is more a gamble than anything else. It’s hard enough trying to predict the movements of real currencies, let alone cryptocurrencies. Furthermore, I’m rather suspicious of anyone wanting to trade anonymously. Remember that the Silk Road website was closed down a few years ago, following raids by the FBI amid allegations of drug dealing. Millions of dollars of Bitcoin were confiscated during those raids. It’s not surprising that governments are becoming concerned about the lack of regulation around the cryptocurrency as well as its potential to be used in illegal activities. So will Bitcoin (and all the other cryptocurrencies) crash? I don’t know the answer, but I’m not willing to risk my hard-earned money in a Bitcoin investment. Fortunately, my financial adviser shares my views. On a different note, I must say that it was a pleasure to feature some of the country’s wonderful women in financial services in this month’s magazine. I wish them – and all our female readers – a very Happy Women’s Month. Janice janice.roberts@newmediapub.co.za @MMMagza www.moneymarketing.co.za

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