Banks ill-prepared for new Act
SA's banking fraternity does not seem entirely sure what the implications of the new Companies Act will be on its IT systems.
However, it will now have more time to prepare, as the implementation of the Act has been pushed back to next year.
The Act - an upgrade of the existing legislation that dates back to 1973 - will allow companies to register business names that contain symbols such as +, &, #, @ and %, as well as longer entity names. It was initially meant to come into force this month, but has now been delayed until next April.
Trade and industry minister Rob Davies last month delayed the implementation of the new Companies Act and the Consumer Protection Act, to “enable the department to finalise all processes required to effectively administer these two pieces of legislation”.
A statement released by the department said the postponement “will also give business and the public sufficient time to prepare themselves for compliance with the new laws”.
After much uncertainty surrounding the implementation of the legislation and whether government would stick to the original deadline, it now seems the delay is fortuitous for local financial institutions. Three of SA's big four banks are still investigating the ramifications of the legislation.
None of the banks approached by ITWeb provided details as to what the exact implications for their IT systems would be, nor how much money they may have to invest in order to meet the Act's requirements.
In addition to allowing the use of symbols, section 11 of the new Act indicates that companies would also be allowed to register names that include “any letters, numbers or punctuation marks", as well as "round brackets used in pairs to isolate any other part of the name, alone or in any combination". Davies may also add additional “commonly” recognised symbols into the mix.
Marthinus van Rensburg, Absa's head of legal affairs, says symbols in the names of companies and names longer than the current limit would “present challenges”. However, the bank has embarked on a “group-wide implementation programme to ensure compliance and readiness by the official implementation date”.
Van Rensburg says Absa is “considering a number of solutions and workarounds” that will enable it to “timeously meet these challenges in a cost-efficient manner”. He adds that it is unclear at this stage exactly how many customers would opt for including symbols in their names or adopt longer names.
Standard Bank spokesman Ross Linstrom says the bank is “looking into the exact impact of this on its systems and is working with the Banking Association of SA and other role players, such as credit bureaus and Bankserv, to understand the full implications for the payments system”. He did not provide further information.
Rocco Joubert, head of operations at FNB Commercial, says the bank does not anticipate the inclusion of characters as an obstacle, but is “investigating the matter further”. “FNB has run tests on the printability of special characters on cheque books and all the characters specifically mentioned in the new Act are included as 'recognised'.”
Joubert adds FNB should be able to accommodate a name containing symbols. “If the characters in the name cannot be accommodated, the systems will still be able to identify the client by virtue of the registration number,” he adds.
Steven Ambrose, MD of WWW Strategy, says if banks are not ready to cope with the new systems, there is a “potential for huge disruptions for business”. He says it does not appear the banks would have met the initial October deadline, and now have a substantial amount of work to do in the next seven months.
Ambrose explains that the banks' legacy systems were not initially designed to accept various symbols. He says financial institutions have an “agglomeration” of systems that have been added to over many years.
In addition, says Ambrose, banks' databases were initially set up with field limitations in terms of characters that can be used, and the number of characters that can be entered. The new law would require a fundamental change to database fields. “It sounds like a simple change, but I think there are some significant challenges that the banks are going to have to deal with.”
Nedbank did not respond to a request for information, and the Banking Association of SA was not immediately able to respond this morning.