The lockdown regulations, as amended on 2,16 and 20 April 2020, designate which financial services businesses are “essential services”, permitted to operate from places of business during the lockdown period.

On 9 April 2020, the Financial Sector Conduct Authority and the Prudential Authority issued a joint directive (the “Precautionary Measures Directive”) to financial institutions setting out the precautionary measures that financial institutions must take when allowing essential staff to render essential financial services from their place of business in accordance with the amended lockdown regulations.

The Department of Trade and Industry and Health also issued specific directions (the “Call Centre Directions”) to clarify the extent to which call centres providing services (including financial services) to international customers may operate and the conditions upon which they may operate under the amended lockdown regulations

There was initially some confusion as to how the Precautionary Measures Directive and the Call Centre Directions should be applied by call centres operated by financial institutions also subject to the Precautionary Measures Directive.

The Financial Sector Conduct Authority and the Prudential Authority issued further guidance on 19 April 2020 to clarify that the Call Centre Directions only apply to (i) call centres providing services to international customers and (ii) call centres providing debt restructuring for consumers of retailers and access to short-term insurance policies as a result of reduced income or loss of income. The Call Centre Directions do not apply to any other call centres providing essential services to South African customers. Such call centres are subject to, where they are operated by financial institutions, the Precautionary Measures Directive.

Where a financial institution operates a call centre that undertakes the services contemplated in (i) and (ii) in the paragraph above, as well as other financial services, that financial institution will be required to comply with both the Precautionary Measures Directive and the Call Centre Directions. If these services are undertaken from shared facilities, then a financial institution is required to comply with the more onerous requirement, provided that any measures already undertaken prior to 19 April 2020 in compliance with the Precautionary Measures Directive or the Call Centre Directions may be retained and need not be replaced in order to ensure compliance with the more onerous requirement.

We summarise the arrangements under the amended lock down regulations below, and highlight some remaining areas of uncertainty.

For some practical tips for businesses providing essential financial services, please clickhere.

The latest position is as follows:

1. The following are included as “essential services” on the basis that they are necessary to maintain the functioning of the “financial system”, but “only when the operation of a place of business or entity is necessary to continue to perform those services” and only if the services do not “include debt collection services”:

• the banking environment (including the operations of mutual banks, cooperative banks, co-operative financial institutions and the Postbank);
• the payments environment;
• the financial markets (including market infrastructures licensed under the Financial Markets Act, 2012);
• the insurance environment;
• the savings and investment environment;
• pension fund administration;
• outsourced administration;
• medical schemes administration;
• the provision of services necessary for the provision of social grants by banks, mutual banks, cooperative banks and the Postbank; and
• additional services designated by the Minister of Finance as necessary to provide or maintain the essential financial services listed above or to provide the social grants mentioned above.

2. The Prudential Authority, the Financial Sector Authority and the Reserve Bank may, despite the lockdown, exercise their powers under financial sector laws in the regulation, supervision and oversight of essential financial services referred to above.
3. The Precautionary Measures Directive must be adhered to when performing essential financial services.
4. The Precautionary Measures Directive requires a financial institution to develop and implement an infectious disease preparedness and response plan to guide protective actions against COVID-19.
5. The response plan must set out the financial institution’s policies and plans aimed at compliance with the Precautionary Measures Directive. A workplace coordinator responsible for COVID-19 related issues and their impact at the workplace must be appointed and such individual will be responsible for timeously responding to the Authorities upon a request for information.
6. The response plan should, in accordance with the Precautionary Measures Directive require the financial institution to comply with a number of requirements. For a summary of the precautionary measures required to be adopted by a financial institution and governed by its response plan, clickhere.
7. In addition, paragraph 30 (as amended on 16 April) designates the following call centres as an essential service “[c]all centres necessary to provide health, safety, social support, government and financial services, debt restructuring for consumers of retailers, and access to short-term insurance policies as a result of reduced income or loss of income”. Notably, the wording does not cross-refer to the essential financial services referred to in paragraph 3. The wording does not exclude “debt collection services” from the reference to “financial services” as is the case in respect of those financial services listed in paragraph 3.1.
8. The regulations require “the head of an institution” (in the private sector, the chief executive officer) to determine the essential services to be performed by that institution and the essential staff that will do so. Those persons must be designated in writing and issued with a “permit” on a prescribed form.
9. Although the precise legal basis for doing so is unclear, the CIPC is operating a system for businesses conducting “essential services” to register as such.

Practically, the above broadens the list of essential financial services, but is subject to the limitation that the financial services may only be rendered from places of business if doing so is necessary to continue performing such services and must be done in accordance with the Precautionary Measures Directive and Call Centre Directions, where applicable.

Can my business operate from our place of business?

Financial sector businesses in doubt as to whether they qualify to operate from a place of business would have to ask themselves four questions. Only if the answer to all four questions is “yes” may the business operate from a place of business:

1. Do the services I render fall within the above list or any other essential service?
2. Can my services only be rendered from a place of business and not on a work from home basis?
3. If my services can only be rendered from a place of business, can I comply with the Precautionary Measures Directive and, where relevant in respect of call centres, the Call Centre Directions.
4. As a practical matter, have I taken the following steps:
   • Ensured that my business is registered with the CIPC
   • Delineated the essential services provided by my firm, designated the essential staff engaged in doing so and issued the necessary permits.
   • Taken the necessary precautions required by the Precautionary Measures Directive and, where relevant in respect of call centres, the Call Centre Directions.

What about debt collection services?

“Debt collection services” are not essential services and may therefore only be conducted from normal places of residence. It is unfortunate that “debt collection services” is not defined in the amended regulations.

The phrase has a wide range of potential meaning and essential services providers should ensure that they have considered whether their operations might include “debt collection services”. It should be noted that call centres operating as essential services providers may undertake debt restructuring services for consumers of retailers as a permitted essential service.

Call centres

It is quite clear that essential financial services, including debt restructuring for consumers of retailers, and access to short-term insurance policies as a result of reduced income or loss of income, may be provided from call centres, despite the lockdown.

Based on the wording of the regulations, it can also be argued that call centres that provide any financial services are essential services and may continue to operate despite the lockdown. This latter argument is not necessarily consistent with the overall purpose and structure of the regulations and is one that each business should evaluate.

A number of call centres have received visits from the police and it is important that call centres are in a position to provide evidence of their compliance with all aspects of the regulations and the Call Centre Directions. The Call Centre Directions provide that law enforcement officers and inspectors may inspect a call centre atany timethat it is in operation to ensure compliance with the Call Centre Directions.

The Call Centre Directions apply to all permitted call centres, including financial services call centres, and have a number of requirements to be complied with. For a summary of the requirements imposed on a call centre by the Call Centre Directions clickhere.

Aslam MoosajeeExecutive Dispute Resolutionamoosajee@ENSafrica.com+27 82 461 5917

Angela ItzikowitzExecutive Banking and Financeaitzikowitz@ENSafrica.com+27 83 680 2077

Johan LoubserExecutive Banking and Financejloubser@ENSafrica.com+27 83 704 6732

Jessica BlumenthalExecutive Banking and Financejblumenthal@ENSafrica.com+27 82 788 0352

Roger RudolphExecutive Banking and Financerrudolph@ENSafrica.com+27 82 451 0483

Metumo ShilongoSenior Associate Banking and Financemshilongo@ENSafrica.com+27 82 560 3101

COVID-19, also known as the Coronavirus, is an infectious disease caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) that was declared a pandemic by the World Health Organization on 11 March 2020. The disease has since been reported in over 190 countries.