‘03

Compliance

In the past few years, the financial services industry has undergone dramatic changes, particularly as a result of new legislation and regulation.

In response, apart from programmes aimed at focusing on corporate governance and ethics, a great deal of work has been completed in terms of updating Old Mutual’s compliance and governance frameworks.

The focus for 2003 was on assisting each Business Unit to update, develop and implement its own Compliance Risk Management and Monitoring Plan.

Central to that focus was ensuring that compliance goes beyond manuals. A significant effort has been directed at educating staff about the need for compliance. Specifically, staff have received education – and where relevant, systems have been modified – to ensure compliance with the following legislation:

• Policyholder Protection Rules (PPR);
• The Promotion of Access to Information Act (PROATIA);
• The Financial Advisory and Intermediary Services Act (FAIS);
• The Financial Intelligence Centre Act (FICA).

The following components of the integrated Group Compliance Strategy are in place across the Group:

• Group compliance manual and framework;
• Group compliance philosophy and policy;
• Performance contracts for compliance role players;
• Guidelines for interaction with regulators;
• Revised reporting and monitoring framework;
• Group anti-money laundering policy;
• Suspicious transaction reporting and know your client procedures in terms of anti-money laundering legislation.
  

Additional information relating to the Board of Directors and Compliance can be obtained from the Company Secretarial Department and the Group Compliance Officer. The Old Mutual Code of Ethics is accessible on the company’s website at www.oldmutual.com.

A corporate governance initiative involving the four relevant risk assurance providers (Enterprise Risk Management, Group Internal Audit, Compliance and Corporate Secretarial), is currently under way.

The Audit, Risk and Compliance Committee has requested an annual report on compliance with the Code of Ethics. The next Corporate Citizenship Report will feature the results of this report.

Corporate governance survey

An Ask Afrika survey commissioned by Old Mutual took place during 2003 to measure staff awareness of corporate governance.

The survey involved 2 669 interviews with an average duration of 25 minutes each, over a period of four weeks.

Key findings were that:

• employees have a good understanding and awareness of corporate governance;
• of all the attributes that have an effect on corporate governance, regulatory compliance and effective management were seen to have the highest effect;
• Old Mutual is currently performing better in the area of risk management and values, while scoring relatively lower on effective management;
• in the area of scoring relatively lower on effective management; respondents from senior grade levels have a better understanding of good corporate governance;
• employees believe that their role in contributing to corporate governance is mostly centred around their service delivery which must be in line with the Old Mutual service standards.
  

Whistle-blowing

There are various platforms offered to staff members who wish to report fraud within the company, including a web form on the company Intranet and a Tip-Offs Anonymous Hotline. In addition, the company offers a FreeCall number, a unique e-mail address and a FreePost address.

Litigation

Old Mutual South Africa is not presently involved in any material litigation in which the company stands accused of having acted either immorally, unethically, or to the detriment of the community, its shareholders or its body of policyholders. Nor is the organisation in breach of its statutory or regulatory obligations.

The company is currently only involved in litigation concerning matters that arise from, and are incidental to its normal business operations, such as the recovery of monies due to the company and defending claims that are believed to be fraudulent and/or without merit. The best interests of the group, its shareholders and/or policyholders guide these legal actions.

Enterprise risk management

Enterprise Risk Management is about identifying and assessing risks, and then designing and implementing actions and systems of internal control so that those risks can be managed to an acceptable level.

Old Mutual has risk management processes that have been implemented at both strategic and business unit levels. These processes give each business unit a comprehensive manner of identifying the risks facing its business, a means of managing those risks, and a way of assessing the controls that will minimise the risks.

The roll-out of Project GERI (Group Enterprise Risk Initiative) is an initiative being driven across the Old Mutual plc group. The objective is to deliver an integrated risk management solution, covering risk culture, structure, processes and systems.