LEGAL COMPLIANCE
The compliance function’s purpose is to provide assurance to the board that the group is compliant with applicable legislation.
The group’s compliance function is divided into three areas:
- general compliance, a focus on new or amended laws and the co-ordination of group compliance;
- FG Financial Services’ retail credit and technology products’ compliance; and
- compliance within the RCS Group.
The responsibilities of the three areas of the compliance function include:
- identifying and advising the group on existing and new legislation that is applicable to the group’s business;
- facilitating compliance with relevant legislation and assigning responsibility for areas of compliance;
- facilitating compliance with internal policies, rules, guidelines and procedures; and
- monitoring of compliance.
There have been many changes to laws and regulations in the previous years, with more laws to be finalised or effective shortly.
New pieces of legislation that will affect the group are:
- Consumer Protection Act (not yet effective; regulations needed);
- Companies Act (not yet effective and to be amended before operational; draft regulations need to be finalised); and
- Protection of Personal Information Bill (not yet finalised).
The group has working groups and project boards in place to ensure that there are impact assessments on new laws or amendments. Thereafter timelines, implementation areas and business owners to implement changes are agreed.
The Consumer Protection Act will impact, among other things, the merchandise sold in stores. Certain services are also affected, such as repairs. Working groups have identified certain products, such as cosmetics, homewear, sports equipment, cellphones, as examples where this Act has particular application.
This is in addition to, and often overlapping with existing laws, such as the Foodstuffs, Cosmetics and Disinfectants Act. In order to assess the full impact of the Consumer Protection Act, final regulations are needed. These regulations need to be finalised by 24 October 2010. In addition, industry codes will detail how industries ensure that consumer rights are upheld in businesses within an industry.
Based on core laws that are effective as at 31 March 2010, there are no material areas of non-compliance.
Changes arising from the National Credit Act and amendments to the Regulation of Interception of Communications Act have been implemented and business processes changed to ensure compliance.
There are ongoing changes to fiscal legislation. These are monitored and implemented by the group’s tax department.
During the year a gap analysis between the group’s current practice and that recommended by King III was undertaken. Many of the King III practices and recommendations were already in place. Those areas requiring corporate governance changes have been identified and are in the process of being implemented.
The group compliance officer gives report-backs at each audit committee meeting.
The internal audit department and the compliance function work closely together, with the former assisting at times with monitoring compliance. Where significant compliance issues are identified they are referred for independent review to outsourced experts.
