OFFICE OF THE OMBUD FOR FINANCIAL SERVICES PROVIDERS Mr. Michael Gcwabaza 23 AUGUST 2005 PRESENTATION TO THE PARLIAMENTARY PORTFOLIO COMMITTEE ON FINANCE

FUNDING OF THE OFFICE  Section 22 of the FAIS Act covers matters relating to funding sources: 1.FAIS Levy 2.Case fees 3. Funding for special projects

1.FAIS LEVY  This is the PRIMARY SOURCE of funding  Funding is on the basis of the Office budget approved by FSB  The FSB collects FAIS Levies from the industry and allocates such to fund the operations of the FAIS Ombud and FAIS department of the FSB on 25% : 75% split

2.CASE FEES  Section 22 of the FAIS Act – allows the FAIS Ombud to charge case fees from Financial Services Providers against whom a complaint has been lodged and accepted for adjudication  The case fee is R 1,000  This is not the primary source of income

3.SPECIAL PROJECT FUND  FAIS Act – allows for FAIS Ombud to source funding from any potential source including donor funding in order to advance the interests of the Office. As yet, this has not happened

FINANCIAL YEAR CYCLE  The Year begins onApril 01  The Year ends on March 31

ACCOUNTABILITY  The Ombud is the Accounting officer  The accounting authority is the FSB  The FAIS Committee – subcommittee of the FSB oversees our administrative operations  The Office is in compliance with the following:  PFMA, in terms of procuring and controlling expenditures  GAAP, in terms of record keeping  Generally Accepted Auditing Standards,  Corporate Governance

FINANCE FUNCTION  The Office operates a dedicated bank account as required by Section 22(2)  In 2003/2004 the accounting function was outsourced to FSB and PWC  Since 01 April 2005 – Accounting is done in-house using ACCPAC financial system  The 2004 Audit Report – Unqualified  The 2005 Audit Report – Unqualified  Internal Audit function

REPORTING  2004 Inaugural Annual Report  2005 Annual Report due by September 30  First year of operations – set up costs incurred by FSB to establish the Office  Second year of operations - staffing, - putting systems in place, and - adjudication of complaints

FINANCIAL RESULTS  January 2005 levy from FSBR 1.8 m  July 2005 levy from FSB R.9 m  November 2005 estimated levyR 8.8 m  Loan owing to the FSB, March 2005R 7.7 m  The loan is resulting from delays in the invoicing and receiving of FAIS levies – the role of the FSB  It is projected that the loan will be repaid over a two year period after which the Office will run a balanced budget and later accumulate surpluses

THANK YOU!