Financial Sector Regulation “Twin Peaks” Bill [B34-2015]: chapters 14 & 15

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Finance Standing Committee

14 September 2016
Chairperson: Mr Y Carrim (ANC)
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Meeting Summary

The Committee continued its preliminary clause by clause deliberations on the Financial Sector Regulation “Twin Peaks” Bill, covering clauses 211 to 237. The Committee considered the July version of the bill, while also reviewing the updates contained in the August version, with National Treasury regularly indicating changes and the final position.  

Clause 216 sparked much discussion, where the deliberations considered the potential requirement for financial institutions to have to disclose to financial customers their rights to approach the relevant ombud scheme. It was indicated that there were such obligations in place to make such disclosures. Further, there was provision for such disclosure under the rules applicable to ombud schemes.

Chapter 15 was a major point of discussion and several points were raised, including:

  • Clause 225, which saw Members raising concerns about the service of members on panels -- specifically that the rotation of members was important, given the demographics of the country.
  • With Clause 226, Members asked for clarity on the requirements of panel members -- whether the chairperson had to be a lawyer or more specifically a retired judge. It was indicated that it was required that a lawyer with suitable experience was required to chair the panels, with other members having relevant experience.
  • Under clause 234, Members were concerned about the nature of the Financial Sector Tribunal and its relationship to its panels. It was suggested that it would be best if the panels acted as a form of sub-committee of the Tribunal, and that they ought to submit their decisions for ratification to the Tribunal. It was decided that the position in the bill should be maintained, with the panels forming part of, and making decisions on behalf of, the Tribunal. Further, that this policy position should be clarified in the bill.
  • With clause 236, there was concern about the reference to the Promotion of Administrative Justice Act (PAJA) limiting the grounds for review. It was decided that the reference to the Act should be removed, because people would have rights to judicial review regardless of PAJA.

Meeting report

The Committee continued its preliminary clause by clause deliberations on the Bill, covering clauses 211 to 237.

 

Chapter 14: Ombuds Regulatory Council

 

Part 4: General Provisions

 

Clause 211 - Restrictions on financial institutions in relation to ombud schemes

The Chairperson asked what was being done with the clause.

 

Ms Keisha Singh, Deputy Director: National Treasury, said the drafting changes in 211 and 212 were trying to make the clauses as simple as possible. Clause 211 indicated that it could not have internal procedures which it referred to as an ombud scheme. In the ‘August version’ (August draft) of the Bill, it had also been clarified that they may not refer to any person in the institution as an ombud. The aim was to ensure the internal complaints mechanism within an institution would not be confused with an independent ombud.

The Chairperson said many changes had been made to the July version (July draft), and these differed from those in the August version, so those always needed to be clarified.

Ms Singh said the drafting in the July Version did not provide enough clarity that there could not be an internal ombuds process.

Clause 212 - Applicable ombud schemes

Ms Singh said this clause tried to provide that as many financial institutions as possible were covered by the ombud schemes. This was part of why the Financial Sector Regulation Bill (FSRB or the Bill) no longer referred to the schemes as voluntary schemes, but industry schemes. The intention was that if there was an ombuds scheme dealing with the products an institution offered, it must be part of that scheme.

The Chairperson asked about the changes in the August version.

Ms Singh said subclause (3) had been deleted, because it was doing the same thing as (4)

Clause 214 - Collaboration between ombuds and ombud schemes

The Chairperson asked what was happening with the August version.

Ms Singh said the clause was now more explicit on what collaboration could entail, with ombuds being able to develop their own process on how to hear a matter jointly.

Clause 215 - Amendment of governing rules

The Chairperson asked why subclause (2) had been deleted.

Ms Singh said this was the process which the Ombuds Council had to follow when publishing rules or amendments. The Bill now indicated that when this was done, it must be done in accordance with the process in Chapter 7.

Ms Katherine Gibson, Treasury Chief Director: Financial Sector Conduct, added that this clause dealt with governing rules of the scheme which were not subordinate legislation. Where there were rules relating to the Ombud Rules, they would have to go through the process, but when there were rules relating to the scheme, they did not have to go through as intense a process.

The Chairperson accepted this.

Clause 216 - Obligation to comply with governing rules of recognised industry Ombud schemes

The Chairperson asked why ‘licensed’ was taken out of subclause (1). He also questioned why all the changes had been made since the July Version of the Bill, and how ready National Treasury (NT) was to finalise the Bill.

 

Ms Gibson said NT had been making additional refinements and checking all the fine detail. In this case it would not have been wrong, but having it simply as ‘financial institution’ made it wider.

The Chairperson said in his experience more changes than usual were being made at this stage of the Bill, and that was concerning, despite indications that they were minor. He suggested that these sorts of fine details would have to be handled by a sub-committee, as informed by the Committee support staff. Further, during the study tour to the UK, it seemed that the financial institutions had an obligation to inform the customer of their rights and institutions available to help them. What obligations did the bill impose on financial institutions to act similarly, and could more be done?

Ms Caroline da Silva, Deputy Executive Officer: Financial Services Board (FSB), said the Financial Advisory and Intermediary Services Act (FAIS Act) compelled every financial services institution to disclose up front to the consumer the internal dispute resolution mechanism and the external ombud. The obligation was at the point of any contracting with clients.

The Chairperson said he had been working since 1983, and he did not  recall a bank ever informing him of his rights, so how did this happen in other jurisdictions?

Ms Gibson said  Ms Da Silva had spoken to the FAIS Act, which dealt with the intermediation of the products, as opposed to the product provider. This went to the reason for the cross-cutting approach. The bill itself did not impose that obligation and was, in the main, a bill which related to the regulating authorities. What had been provided for was that this sort of requirement would be imposed by the Ombuds Council in its rules. This could go beyond simply requiring the disclosure and prescribing how to do so.

The Chairperson asked whether anything could be done in the bill, or whether it being captured elsewhere was sufficient.

Ms Singh said there was work going on within the Financial Services Board (FSB) dealing with the internal complaints management process of financial services institutions and strengthening its management. In some instances, customers forget the disclosure, mentioned by Ms Da Silva, when entering into a relationship,. The FAIS Ombud had indicated they received routine customer communications, not complaints, which were intended for the financial services provider. With the Financial Sector Conduct Authority (FSCA) strengthening how financial institutions handled complaints, one thing which needed to be emphasised was that the avenue to the ombuds system was better disclosed than explained. In clause 210, the centralised contact point for ombuds schemes would make it easier; with one contact regardless of the nature of the financial product causing the dispute.

The Chairperson said the response went to when people actually had a dispute, and his question was whether it would be reasonable to have people being informed as the norm, and whether this was done in other countries. He could not see what the crime would be with banks having to put up posters informing people of their rights.

Ms Gibson said NT agreed, and had provided for such a provision to be part of the Ombud Rules, dealing with how the ombuds and ombuds’ schemes need to govern their arrangements and the members of those schemes. If this needed to be more explicit, that would be done.

The Chairperson asked how it could be made certain that his concern was covered.

Ms Gibson said the clause could make it explicit that such provisions were required, rather than only enabled for the Ombud Rules.

The Chairperson said something which was also fair to industry was required, and perhaps it could be made a requirement after appropriate consultation with industry, because the cost of this would eventually be borne by the consumer.

Clause 217 - Time barring terms suspended

The Chairperson asked what the clause did.

Ms Gibson said this dealt with the lapsing of a consumer’s right to complain after a certain time.

Ms Jeannine Bednar-Giyose, Director: Financial Sector Regulation and Legislation, NT,  said the Prescription Act dealt with the right to pursue claims in court, and this provision intended to ensure that the normal timeframes did not run during the period where a complaint was being handled by a financial sector regulator or an ombud scheme. This would prevent unnecessary obstacles to the consumer pursuing a claim through litigation, if necessary.

The Chairperson asked if the heading was appropriate and clear enough.

Ms Da Silva said many policy contracts also had time barring clauses in them, requiring a customer to lodge a complaint within a certain time period, and the provision also suspended those.

The Chairperson noted that time barring was a term used in the industry.

Clause 218 – Reporting

The Chairperson asked if ombuds were supposed to report on every complaint, or whether the idea was to report trends.

Ms Singh said the intention was to report trends, but also to have a summary of what was dealt with over a period.

The Chairperson asked whether anything had been done to the August Version.

Ms Singh said the August Version required the Ombuds Council to provide the Minister of Finance and NT with information. In the July Version, it was at the request of the FSCA.

The Chairperson said industry had raised a few concerns, including asking how it was envisaged that the industry ombuds schemes were to be funded, because the cost would ultimately result in higher costs to consumers. What was Treasury’s response, having mentioned the levy previously, and how did that deal with Members’ concerns about how this would impact on the financial customer?

Ms Gibson said there would be additional costs by the very nature of creating a more active Ombuds Council. The justification was the fact that the current ombuds schemes were not working in the best interests of customers to the extent that they should be. NT viewed this as the most cost effective way to achieve change.

The Chairperson said the Committee knew all of that, so the answer essentially was that the measure would result in higher costs, but there was nothing to be done.

Ms Singh said as it was a levy body, which meant there would be a process to be followed when setting the levies.

The Chairperson said this was also understood.

Ms Rosemary Lightbody, Senior Policy Advisor: Association for Savings and Investments South Africa (ASISA), said this particular comment was made by the short term insurance industry, so ASISA did not share this view.

Chapter 15: Financial Services Tribunal

 

Part 1: Interpretation

 

Clause 219 -Definitions

Mr Roy Havemann, Chief Director: Financial Stability, NT, said minor changes had been made to subclauses (f) and (g). With (f), ‘prescribed period’ had been changed to ‘period prescribed or specified in relevant financial sector law rules or other requirements pertaining to the decision maker’. Subclause (g) had been changed from market infrastructure to decision maker.

The Chairperson asked what the reason for the change in (g) was.

Mr Havemann said later in the clause decision-maker was defined, and that term would be used for consistency.

Mr B Topham (DA) asked whether it was normal to have definitions inserted in the middle of a chapter.

The Chairperson said he had seen this before, and it was because the definitions applied to the Chapter.

Ms Bednar-Giyose said normally definitions were put in in section 1, but these applied to only a small portion of the bill.

Part 2: Financial Services Tribunal

 

Clause 220 - Establishment and function of Financial Services Tribunal

Mr Havemann said this clause had been through several senior counsel opinions.

The Chairperson said NT had already reported on this clause.

Clause 222 - Term of office and termination of membership

The Chairperson said sometimes the bill required reports to Parliament, even though it had nothing to do with appointments in the case of a termination of an appointment to a board or the like, because it was in the interest of openness and transparency. However, in this case, it had not been done and presumably this was because it was not significant enough.

Mr Havemann said the Chairperson was referring to the clauses on the Prudential Authority (PA) and FSCA chapters, and the Chairperson was correct. He noted the addition of the words ‘on delegation by the chairperson’.

Clause 223 -Staff and Resources

The Chairperson asked if the word ‘improper’ was necessary.

Ms Gibson said it was not, and this would align across the Bill.

Clause 225 – Panel list

The Chairperson asked whether subclause (1)(b) could not read “be fit and proper to be included in the panel list.” as it was more grammatically correct. Further, he asked what ‘appointment on an equitable basis’ meant here.

Mr Havemann said it was more about sharing the work load between panel members.

The Chairperson asked whether it would be clear if it read “the appointed persons must serve on an equitable basis”.

Adv Frank Jenkins, Senior Parliamentary Legal Advisor, said for him this was more appropriate when handing out benefits, but it was not fully clear.

Ms Bednar-Giyose said the purpose of the provision was to ensure that it was not favouring the appointment of certain people appointed to the panel, and excluding others who had been appointed to the panel from handling cases.

The Chairperson said the concern was that if the panel had six members, two would consistently be appointed and the others not.

Ms Bednar-Giyose said the intention was that from the list of potential panel members, it was encouraged that as many were selected to serve on panels. 

The Chairperson said the sentence did not make sense to him, but the point being made was valid.

Mr Havemann proposed deleting it, because currently the Minister must do this work, and reducing the load may be a good thing. They would still invite applications, but would not have to ensure equitable service.

The Chairperson said there were real issues about South Africa’s racial demographics, where a representative panel was appointed yet certain individuals who came from a historically advantaged position were consistently used more often. 

Mr Havemann asked if it would be better for the chairperson to ensure the equity.

The Chairperson said Treasury should make this simpler, and Members ought to agree that this was too trivial for the Minister to deal with.

The Chairperson asked why there was no right of reply in subclause 225 (5)(b), and whether this was covered by general law.

Mr Havemann said the point of this clause was that this decision could be taken on review, so there was a procedure under the recommendations. Further, this referred to the panel of the Tribunal, while elsewhere the right of reply was given to the head of the regulatory authorities.

Clause 226 – Constitution of panels

The Chairperson asked whether under subclause (2) (b), the panel members had to be lawyers. If not, should there not always be at least one lawyer?

Mr Havemann said the type of person was covered by subclause (2)(a).

Ms Gibson said one should keep in mind that there were many different types of expertise required to look at financial sector decisions, which were not necessarily legal.

The Chairperson said there should be at least one lawyer, but the other person could be the relevant expert.

Ms Janet Terblanche, Policy Division: South African Reserve Bank, said subclause (2)(a) provided that the person presiding over the panel would be the lawyer.

Mr D Maynier (DA) asked if it was possible that no member of the tribunal would be a retired judge.

Mr Havemann said that was correct.

The Chairperson said he had also noted that, and thought it was fine, because there was a problem with using retired judges all the time.

Mr Havemann said clause 221(2)(a) read: “at least two persons who were retired judges or persons with suitable experience and expertise in law”, so he would read persons with suitable experience in law as persons who were close to retired judges.  

The Chairperson said that it should be left that way, because it would become a practical problem to over-use retired judges. Frankly, there could be people who had great legal experience, but who were not judges, so he had considered Mr Maynier’s point, but did not feel it would add value.

Ms Terblanche said the current appeal board on which these provisions had been based, did not have a requirement that all panels were presided over by retired judges, and senior advocates were sufficient.

The Chairperson said the Committee should agree to disagree with Mr Maynier. Further, was it clear that as this was a tribunal, at least one person must be lawyer.

Mr Havemann said subclause 226 (2)(a) required someone to preside over the panel who must be someone mentioned in clause 221(2)(a) or 225(2)(a).

The Chairperson said he felt it was not clear, and it should be made clear. The Committee was insisting that one of the people must be a lawyer.

Mr S Buthelezi (IFP), on the issue of retired judges, said he would not like judges to be excluded, but they were not necessarily required.

The Chairperson said that was the position, under 221(2)(a). In subclause (3)(c), was the word “before” indicating before in the sense of something being dealt with by the panel?

Ms Bednar-Giyose said if a panel was unable to complete a hearing, then the chairperson may constitute a new panel to continue and finalise the matter.

The Chairperson said if a simpler word could be found, that would be good. He asked what subclause (5) meant.

Mr Havemann said when Tribunal was read, this includes the relevant panel.

The Chairperson asked if Adv Jenkins felt this was clear enough.

Ms Bednar-Giyose said this could be simplified.

Mr Topham asked what the intention was behind using the word “Tribunal” and “panel.” Did one do something different from the other, or were they one and the same?

Ms Bednar-Giyose said the panel was a smaller subset of the Tribunal, to consider a particular case. The panel had the powers and was acting as the Tribunal in relation to that particular case, but it was a part of the Tribunal.

Clause 227 – Disclosure of Interests

Ms T Tobias (ANC) said the disclosure was under this clause, but should a disclosure be only limited to the terms which were there. Should it not cover all other laws of disclosure?

Mr Havemann said this did appear quite regularly, and the intention was to bring awareness of conflicts of interests.

The Chairperson said a person may not realise that there was a conflict, until the matter came before the panel, but had not realised it at the outset.  Then, as soon as the person was aware, the conflict was disclosed, before the decision was made.

Ms Tobias clarified that her question was whether the disclosure should be limited only to this subsection, or would other disclosure laws apply.

Ms Terblanche said this subclause referred only to the process of disclosure, so how should the disclosure be made?

The Chairperson asked for Adv Jenkins to respond.

Adv Jenkins said he did not see a problem with the subclause, because he was not aware of any other law which would find application here. It applied specifically to this area, and to members of the panel. As the Chairperson had said, when a member became aware of a conflict, they had to disclose and withdraw. It was usually a material interest, or the panel must decide, but it did not have to go wider than the subclause.

Mr Buthelezi said Ms Tobias’s concern was whether this should be broader than having to disclose only matters relevant to the panel, and to extend it to full disclosure of potential conflicts.

Mr Havemann said civil servants had to disclose annually, and a provision could be added.

Ms Tobias said there were people who wanted to question the role of the Tribunal, so the system should be tight.

Mr Buthelezi said the difference between this panel and general disclosure, such as that required by Members, was that it would be a little bit difficult to disclose pre-emptively. For example, people who had their own law firms may find it difficult to disclose up front, because a firm may come across a matter later which caused a conflict. He felt it was proper that when a matter came before the panel the members disclosed then.  

The Chairperson said the clause suggested by Ms Tobias would then be a separate one, for general disclosure. However, Mr Buthelezi was correct.

Mr Havemann said this clause should not be dropped, and a clause as suggested could be added.

The Chairperson said the clause had been used repeatedly elsewhere, and if there was another context where the clause proposed by Ms Tobias was appropriate, it should be put in for consistency. Clause 227 (1)(a) read: “an interest which could be seen as affecting the member’s proper execution”. This was an odd way of saying it, because it could be seen as being too subjective.

Adv Jenkins said this was a bit clumsy, but conflict of interest usually came from a subjective point of view. “Perceived” was usually the term used.

The Chairperson said this should be looked into, towards ensuring it was consistent with clauses in the bill and other legislation.

Mr Topham said he liked the clause, because it would cover the situation where an attorney who was a partner in their firm, acted for someone.

The Chairperson asked why clause 222 had been removed.

Mr Havemann said this was a result of the tracked changes, and was now located under clause 235.

Clause 228 – Tribunal Rules

Mr Havemann noted that “Rules” had been capitalised.

Part 3: Right to reasons for decisions

The Chairperson asked why reasons were not given in the first place. In clause 229, it was indicated that the person should be informed of the right to request reasons. Then it was indicated that they were to request reasons if they wanted them. As this was a Tribunal, what would the problem be with giving them reasons for the decision in the first instance?

Ms Terblanche said these were the decisions which the decision-maker made, and for the most part those would be accompanied by complete reasons. However, sometimes there may be a simpler decision where there would not necessarily be reasons. That was why it had been provided, for where reasons had not been given.

The Chairperson said that was fine, if that was how it worked in practice

Part 4: Reconsideration of Decisions

 

Clause 231 – Applications for reconsideration of decisions

Mr Havemann said under 231 (2)(b), 60 days were allowed for the bringing of an application for reconsideration, but Treasury proposed extending this by such a longer period as may on good cause be allowed.

 

The Chairperson said this was good.

Clause 232 –  Operation of decisions not affected

The Chairperson asked if “operation” was the correct term.

Mr Buthelezi asked what the problem was with simply suspending the decision.

The Chairperson said this wording should be checked.

Clause 233 – Proceedings on reconsideration of decisions

The Chairperson asked if subclause (3) made sense and if the word “proceedings” was necessary. Should it not read that “the panel must conduct any hearing it holds in relation to reconsideration of a decision in public”, or was it the consideration of the proceedings?

Ms Bednar-Giyose said it could simply read that the hearings must be conducted in public.

The Chairperson said that should be done. Further, what if the person did not comply with a direction under subclause 5(a)?

Ms Terblanche said that was an offence under clause 264, which reads that “a person who contravenes a direction under 233 (5)(a) or refuses without reasonable excuse to take an oath or make an affirmation commits an offence and was liable upon conviction to a fine not exceeding R5 million or imprisonment…”

Clause 234 – Decisions of Panels

Mr Topham said he understood the choice of wording of “reconsideration of decision” to indicate that the any decision made by an authority could be referred for reconsideration, and that was the only role of this panel.

Mr Havemann said there were two options -- either a panel could send the decision back to the regulator, or replace the decision.

Mr Topham said, looking the following clause, he thought perhaps the Tribunal could overrule the decision of a panel, but it seemed not as they were the same entity. Perhaps a sub-paragraph should be put in which made it clear that a decision of a panel was a decision of the Tribunal.

Ms Bednar-Giyose said the earlier clause, which indicated that the panel was acting for the Tribunal, would cover that concern.

The Chairperson said he had also thought that, and perhaps as Mr Topham had raised it, it should be clarified. 

Mr Topham said Mr Maynier had also thought that a decision of a panel was not a decision of the Tribunal, but this was not the case. It was like any judge of the high court making a decision on behalf of the entire court. Perhaps it should be made crystal clear, because that had been the intention.

Ms Bednar-Giyose said that could be made explicit.

Ms Tobias said under the Rules of Parliament, a Committee was an extension of the House, so if there could be a clause which explained this, then that would cover it. However, if it was not there, then there was a need for it.

Mr Maynier said practically was it wise for a decision of a panel, which was effectively a sub-committee, to be the same as the decision of the Tribunal.

Mr Havemann said his understanding was that Treasury did not necessarily want to create an additional layer of review.

The Chairperson said also the panel’s decision was not the final decision, because it could go for review. The structure was highly bureaucratised, and Members should not want to have a situation where a panel made a decision, persons were aggrieved and then appealed to the Tribunal. Secondly, a panel was not different from what was there in the legislation. Could NT explain what would happen in practice? Would a panel make a decision and then submit it to a Tribunal meeting for ratification?

Mr Havemann said clause 226(1) indicated how it should work, which would be that the Tribunal received a request for reconsideration, the chairperson then constituted a panel, which would then have the power to make a decision on behalf of the Tribunal. A line could be added, indicating that a decision of a panel was a decision of the Tribunal.

The Chairperson said the question was, in practice, would the decision not even be tabled before the Tribunal?  

Mr Havemann said what was being done with the Tribunal was to merge several bodies, including the Board of Review under the Banks Act and the Financial Services Board Appeal Board. There were scattered appeal bodies throughout the financial sector, and the intention was to create a single appeal body. The Board of Review traditionally looked at decisions made by the Banking Registrar, while the FSB Appeal Board looked at decisions made by the FSB. Treasury was trying to consolidate all of these structures, because this was more efficient. However, each matter would be quite specialised, with a panel looking at banking matters and another looking at insurance matters. There were specialist panels, but the suggestion that the decision should be that of the Tribunal, made sense.

Mr Topham said initially he had also seen it as a sub-committee of the Tribunal, but the intention was that panel members made up the Tribunal, so perhaps it would be better if clause 225 fitted under clause 221. This would make it clearer that it was not a sub-committee. Perhaps the idea of a Tribunal meeting and ratifying the decision of a panel may not be a bad idea. To him, it looked like the intention was to have a sub-committee of the Tribunal, with the Tribunal making the decision. The next clause was about orders of the Tribunal, and in essence it was an order made by the panel, adding to the confusion.

The Chairperson said the majority of Members did not want a two-tier system. However, Mr Topham was correct that it was not clear, and perhaps the suggestion to relocate clauses could be valuable.  Would it be too onerous for panel decisions to be tabled in front of the Tribunal, because presumably 99% would require nominal approval by the Tribunal? Perhaps there could be procedural aspects which needed to be double checked.  He was asking whether it would be a practical problem for all decisions be submitted to the Tribunal for noting, or something like that.

Mr Havemann said he did not think there should be physical meetings, but the papers could be submitted to all Members.

Ms Tobias said she wanted to limit the interpretation of this clause, by explaining if the role of panels regarding the Tribunal was stipulated. If ‘panels’ being an extension of the Tribunal was stipulated elsewhere, there would be no need to explain this again. The easiest way would be to explain the status of panels and their decisions with regard to the Tribunal.

Mr Topham said, looking at members of the Tribunal under subclause (5), it referred to meetings of the Tribunal with the chairperson presiding. Therefore, to go to court to challenge the decisions of the Tribunal, it became clear that this panel was set up as a sub-committee. As the Tribunal met, there were distinct layers, so at least the panel’s decision must be referred to the Tribunal, to make it a decision of the Tribunal, or it must be clarified that they were the same thing. He would prefer it if the panel met, decided and took this before the Tribunal, which would formalise the decision. It was clear that the Tribunal would have meetings and panels would have meetings and there could not be a blanket decision to accept all decisions of the panels, without having considered them.

Ms Tobias asked if there were delegated powers from the Tribunal to the panel, because this could explain the role of the panel.

Mr Topham said even a delegated power should be referred back to the original power-holding entity.

Mr Maynier said a plain reading of clause 236 was that an order of the Tribunal could be taken on review, but the decision of a panel could not.

Mr Havemann said many things would be clarified if it was stated that the panel was part of the Tribunal. The current FSB Appeal Board had eight members, with the chairperson and deputy chair being retired judges, and host of senior lawyers. The idea was not that all eight persons sat every time a decision was made, but rather that someone would be picked to chair, and they set up a panel to decide on behalf of the Tribunal. One did not necessarily always want to convene a meeting of all six Tribunal members. NT could insert a clause requiring that there must always be a Tribunal member at panel meetings, which was only implied, or it could require that the panels were constituted by a majority of Tribunal members.

Mr Buthelezi said he had understood a panel to be a sub-committee of the Tribunal, and it always helped to have a clear delegation of what decisions could be taken at that level. Then it would be very clear what the scope was. If it was a sub-committee, then there must always be a chance for aggrieved persons to disagree and appeal to the Tribunal.

Ms Terblanche said she did not think it correct to look at panels as sub-committees of the Tribunal. The example of the high court was appropriate, because judges made decision on behalf of the court without the judge president signing off on them. The intention was to have panels which made a decision on behalf of the Tribunal.

The Chairperson asked for clear direction from the Members.

Mr Topham said he did not think it was a good idea to say that a decision of a panel was a decision of the Tribunal. It may not be the intention that a panel was a sub-committee, but one could not have a Tribunal made up of specific people and then later have the a panel made up of two Tribunal members and other people making a decision on behalf of the Tribunal. It would be better to change the wording of the bill to allow the decisions of a panel to be reviewable by the court. Therefore, his previous submission that the decision of a panel ought to be the decision of the Tribunal was incorrect, because the Tribunal was distinct. Perhaps, the Committee could encode the delegation if that was required.

Mr Maynier said that in the event of a disagreement between a panel and the Tribunal, the chairperson could then take the panel on review.  

Ms Tobias said the Bill did not indicate that the decision of a panel was final. That was why she had encouraged clarifying the powers of panels, because that would cover the question of whether to appeal to the Tribunal. She understood the intent of having the current position for practical reasons. Then it must be clarified what powers the panels had. The bill did not state that a decision of the panel could not be taken on review. It was better to explain it when the powers of the Tribunal were explained.

Mr Maynier said the solution was simple: the panel should be entitled to make recommendations, and any final decision or order should be that of the Tribunal.

Adv Jenkins said Members needed to look at the interrelation between the panels and the Tribunal. The problem he had with Mr Maynier’s suggestion was that the Tribunal would not actually listen to evidence and come to a conclusion, so it was difficult to see how they would be in a position to make a good decision. This was not a management decision of a company, it was a quasi-judicial decision. He would suggest that the role of the panel should be clarified to say that its decision was the final decision. The panel should be the decision maker -- final for the purposes of the bill, and ordinarily. Too many layers would be frustrating the point.

The Chairperson said he felt the same as Adv Jenkins, but he accepted Members’ interventions as valid and useful. However, Treasury should be more decisive.

Mr Havemann said the way the Chairperson, Adv Jenkins and himself interpreted the clause was the same. Clause 226 (1) was clear that the chairperson must constitute a panel of the Tribunal for each application for reconsideration of a decision. Basically, this indicated that the chairperson would receive an application and give it to the panel to make a decision.

The Chairperson said the Members were correct that this should be made clear, but Mr Maynier’s suggestion would make it too complex. With similar tribunals under other dispensations, how did they work?

Mr Havemann said there were many models, under many different laws. Treasury had selected a model which it felt worked best with the existing expertise, including on the FSB Appeal Board, the Financial Intelligence Centre Appeal Board, and the Board of Review.

The Chairperson suggested that the provision be clarified, but the model was correct. He asked if Members agreed.

Mr Topham agreed and emphasised that Adv Jenkins had said it would not be correct for the Tribunal to rubber stamp the panels’ decisions. However, presently this would not even need rubber stamping, because the panels’ decisions would automatically be that of the Tribunal. Further, looking at 221(5) the chairperson was to preside at meetings of the Tribunal, and what would these meetings be dealing with? So the provision should be neatened up.

Ms Tobias said there was a difference between any panel and a panel which consisted of judges. Even if the decision were to be taken on review, the panellists would have taken a judicial type of decision. It was a high profile panel, and her position was that it should be viewed as an extension of the Tribunal. However, she agreed that the roles should be clarified.

Mr Havemann added that clause 223 indicated what the chairperson was there to do, which was to appoint staff and other administrative aspects.

The Chairperson asked to have an answer on what the Tribunal met to do.

Mr Havemann said this would be to deal with administrative issues. In the current system, there were 17 people, but due to the consolidation this would likely increase to 20, and they would meet quarterly.

The Chairperson said the model was agreed to by the majority, but it ought to be clarified.

Clause 235 – Tribunal Orders

Mr Havemann said this clause was quite important, and there were three options. Subclause (a) allowed the panel to set a decision aside and remit the matter to the decision maker for reconsideration. Secondly, subclause (b) allowed the setting aside and replacement of a decision by the Tribunal. Typical decisions here would be administrative fines. Lastly, the Tribunal could dismiss the application.

The Chairperson asked in subclause 235 (1)(b)(ii), whether the reference should be to clause 219, and not 218. Further, under clause 235 (2) what sort of circumstances would be exceptional so as to make such an order?

Mr Havemann said if someone brought a case to the Tribunal and it was very expensive for the other party, then such an order could be made.

The Chairperson asked what subclause (3) meant.

Mr Havemann said the Banks Act, for example, sets out the role which the Board of Review was to fulfil, which had now been replaced by the Tribunal. This clause required the provisions of the Banks Act which excluded, restricted or qualified the orders which the Tribunal may make in reconsidering a decision, basically to take into account any other law which affected how the Tribunal was to reconsider matters.

The Chairperson asked what was happening with the deletions following clause 237.

Ms Bednar-Giyose said there was one part of the July Version, where certain matters relating to debarments by financial service providers under FAIS Act and certain matters which would go to the statutory ombuds, provided for a full appeal under other legislation. These deleted provisions also dealt with how the Tribunal would deal with these, but this had now been simplified and all matters could be referred to the Tribunal through the same process. The streamlined process had led to the provisions after clause 235 (5) being deleted.

The Chairperson asked whether industry accepted this.

Ms Lightbody said ASISA was now comfortable with the drafting.

The Chairperson said he was more concerned about whether what NT had done was consistent with what it had stated, than for ASISA’s opinion.

Ms Lightbody said Treasury had been consistent.

Clause 236 - Judicial review of Tribunal orders

The Chairperson asked for the cross references to be double checked.

Mr Maynier said on plain reading, it would seem that the intention of the clause was to limit the grounds upon which a person could institute a judicial review, as they would be confined by sections 6(2) and 6 (3) of the Promotion of Administrative Justice Act (PAJA). Was this a correct reading?

Ms Bednar-Giyose said the clause was not intended to limit the grounds for review, but rather to indicate that the grounds in PAJA were available.

Mr Maynier said a person had a right to judicial review on whatever grounds.

Ms Bednar-Giyose said this was to make it absolutely clear, because there were concerns about whether the Tribunal was being set up as an alternative mechanism to the court process. This was to make it explicit that after the Tribunal process, there could still be a review process.

The Chairperson asked about including “any other relevant legislation” after reference to PAJA.

Ms Tobias said that would open the clause up to even more interpretations.

Mr Topham said he would prefer leaving out the specific reference to PAJA, and simply stating there was a right to judicial review, particularly as a major criticism against the bill was that it was draconian legislation and therefore there should be free access to courts, rather than possibly being prevented on a technicality. There may be common law grounds to launch a review, so why limit it?

Ms Tobias said the definitions dealt with the role of the Tribunal, and removing the reference to PAJA could affect that definition.

Adv Jenkins said this clause was trying to indicate that no matter what may be happening in the Tribunal, people could still approach the courts based on the grounds set out in PAJA, captured in section 6(2) and (3). The way the court would view this provision was to read it so as to include all other grounds, and not exclusively. The courts had been looking towards the Constitution, because the grounds in PAJA were limiting. The issues of legality and rationality had been expanded by the courts, and those grounds would also be effective as a basis for review of a decision made under the bill. Therefore, the clause was there for information purposes and it was good that people could see in the legislation that they may still take the matter on review, because that question had already come up. Further, it did not exclude any grounds which the courts may find in the future. However, perhaps it would be best to leave out the specific reference to section 6 of PAJA, as there may be amendments.

The Chairperson asked what Adv Jenkins was proposing.

Adv Jenkins said he would urge that it be reviewable under applicable law, because that would include the common law.

Ms Bednar-Giyose proposed removing the specific reference to PAJA, and allowing institution of proceedings in the high court for judicial review, which generally would include any other grounds.

Ms Tobias asked what section 6 of PAJA provided.

Adv Jenkins said the section was headed ‘judicial review of administrative action,’ and subsection (2) provided that a court or tribunal had the power to review an administrative action if the administrator who did so was not authorised to do so, acted under a delegation of which was not authorised by the empowering provision, was biased or suspected of bias. There were paragraphs going from (a) to (i) under subsection (2), including the grounds mentioned above. Subsection (3) dealt with paragraph (g) of subsection (2), which provided for the failure to take a decision, which was then classified as a decision under PAJA. Subsection (3) then sets out the grounds for review of a failure to take a decision. The sections were quite detailed and indicated the grounds for review, but the specificity was what caused the gaps.

Ms Tobias said on that basis, she would agree to the proposal of Adv Jenkins.

The Chairperson said people had a right to judicial review and Members could quibble, but they would take matters on review anyway. Therefore, he would agree with the input of Adv Jenkins about informing people of their rights, which they had anyway, even if other applicable legislation was not stipulated.

Clause 237 – Enforcement of Tribunal orders

The Chairperson asked what was happening with this clause.

Ms Bednar-Giyose said the provision was intended to say that a Tribunal order could be filed with court and then treated as, and enforced as, a court order. The order of the Tribunal could be filed if no other proceedings had been commenced, such as further appeals or review proceedings.

Adv Jenkins indicated that there was a similar clause earlier in the bill.

The Chairperson said he had also thought it was a standard clause, but he did not understand why there were so many amendments.

Ms Bednar-Giyose said the only amendments were to change the word ‘review’ to ‘reconsideration of a decision’, which was only a wording refinement.

The Chairperson asked what had happened with the deletions following this clause 237.

Mr Havemann said the original clause 228 had been moved to the new clause 229. The old 229 had become the new 230, as with clause 231. This was because of the tracked changes. The old clause 232 was removed as unnecessary. The old 233 was unnecessary, because a line had been inserted to state that this was an internal remedy. The old 234 had been moved elsewhere in the bill.

The Chairperson said Adv Jenkins and the team should check that all the removals were valid.

He then declared the meeting adjourned.

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