Page 79 - Profile's Unit Trusts & Collective Investments - March 2025

The CIS Industry

With the advent of the Collective Investment Schemes Control Act (CISCA), the AUT changed
its name to the Association of Collective Investment Schemes (ACI). Under CISCA, the ACI
became a licensed body in terms of Part III of the Act. Schedule 4 of the Act sets out the matters to
be provided for in the rules of association. By licensing the ACI under the Act, the legislation
allowed a degree of self-regulation according to prescribed requirements.
ASISA was formed during 2008 by members of the ACI, the Investment Management
Association of South Africa (IMASA), the Linked Investment Service Providers Association
(LISPA) and the Life Offices’ Association (LOA). ASISA replaced the ACI as the licensed body
tasked with self-regulation of the collective investment schemes industry, to the extent permitted
under Schedule 4 of CISCA.
As an industry association, a core function of ASISA is the formulation of best practice
guidelines for members. When it comes to policy and regulatory matters, ASISA also serves as a
conduit between members (such as fund managers) and the regulator (the FSCA). ASISA plays an
important role in the creation and distribution of industry statistics and in promoting collective
investments as savings vehicles.
A key role of the ACI was lobbying for legislative changes, an objective which ASISA continues.
As the AUT, for example, the industry body was instrumental in obtaining a tax exemption from
CGT for the collective investments industry.
Note that membership of ASISA is not compulsory although it is strongly encouraged by the
FSCA. The majority of unit trust companies in South Africa are members of ASISA, but some
continue to stay outside of the industry body. Non-members circumvent some of the disclosure
requirements of ASISA and their fact sheets, therefore, demand greater scrutiny on the part of
independent financial advisers (IFAs) and investors.

The FSCA (formerly the FSB)
During the course of 2018, as part of the restructuring required by the Financial Sector
Regulation (FSR) Act of 2017, the Financial Services Board (FSB) became the Financial Sector
Conduct Authority.
In terms of the FSR Act, the regulation of the safety and soundness of financial institutions will
shift to the prudential authority that is functioning within the South African Reserve Bank (SARB)
- see chapter 5 for more details. According to the FSCA, the regulation of the soundness of
retirement funds, friendly societies and collective investment schemes will remain with the FSCA
until March 2026.
The FSCA, a quasi-government body funded by the financial services industry, is the regulatory
body of the CIS industry. The Registrar of Collective Investment Schemes was an official of the FSCA
until the FSCA was restructured into a market conduct authority. There is now a head of investments
within the Conduct of Business Supervision division. Collective investment schemes must be
registered with the FSCA in order to operate legally.
All collective investment schemes are obliged to submit to the FSCA an annual report each year
and details of their portfolios every three months. The purpose of this monitoring is to check that
CIS managers are not falsifying their performance and that fund managers are investing according
to their deeds.
Since March 2015 the FSCA (then FSB) has taken responsibility for the disclosure
requirements of unit trusts and other collective investments – a function previously assigned to
ASISA. FSB Notice 92 maintains and extends ASISA’s long-standing disclosure rules. Salient
points of Notice 92 include the following:
Managers must ensure that all communications (including adverts) are appropriate, clear
and fair
All funds must produce quarterly MDDs (minimum disclosure documents) that conform to
the FSCA model
Performance figures must be truthful, objective and representative
Managers must lodge with the registrar copies of all adverts, MDDs, application forms and
other marketing material

Profile’s Unit Trusts & Collective Investments — Understanding Unit Trusts 77