Medical Aid Scheme Policy on Managing Potential Conflict of Interest

INTRODUCTION
The Scheme conducts its business honestly and ethically wherever we operate. We constantly improve the quality of our services, products and operations and strive to create and maintain our reputation for honesty, fairness, respect, responsibility, integrity, trust and sound business judgment. No illegal or unethical conduct on the part of any employee or affiliates is in the Scheme’s best interest. The Scheme will not compromise its principles for short-term advantage. The ethical performance of the Scheme is the sum of the ethics of the men and women who work here; thus, we are all expected to adhere to high standards of personal integrity.

CONFLICTS OF INTEREST AND TRANSPARENT DISCLOSURE

Trustees and all employees of the Scheme must never permit their personal interests to conflict, or appear to conflict, with the interests of the Scheme, its members or affiliates. This may include but is not exclusive to:

• Real or perceived financial gain resulting from recommendations to our members at a cost to the members.
• An outcome in service delivery or a transaction executed that may differ from the real interest of the members.
• Any non-cash incentives that may be received by the business from affecting any predetermined transaction and / or product.
• Effecting a transaction and / or product that may result in a benefit to another party other than the members.

Trustees and all employees must be particularly careful to avoid representing the Scheme in any transaction with others with whom there is any outside business affiliation or relationship. Trustees and all employees shall avoid using Scheme contacts to advance their private business or personal interests at the expense of the Scheme, its members or affiliates.

Due to the nature of our business, being a duly registered open enrolment medical scheme, the Scheme is governed by the rules and regulations published by the Council for Medical Schemes.

According to the regulations there are only certain levels of broker commissions payable to brokers bringing new business to the Scheme and retaining that business.

No broker can receive any other payment or benefit except for that specified in the Act – Section 65 of the Medical Schemes Act, 1998, Act no. 131 of 1998. Regulation 28(2) published in terms of the Medical Schemes Act at present effectively reads as follows:
“subject ro sub-regulation (3), the maximum amount payable to a broker by a medical scheme in respect of the introduction of a member to a medical scheme by that broker and the provision of ongoing service or advice t that member, shall not exceed –

• R65.65, plus value added tax (VAT) per month, or such other monthly amount as the Minister shall determine annually in the Government Gazette, taking into consideration the rate of normal inflation; or
• 3% plus value added tax (VAT) of the contributions payable in respect of that member, whichever is the lesser.”

The medical scheme’s contribution table is set for all membership and there is no differentiation between a member linked to a broker or a member without a broker in terms of the cost of cover.

Trustees and all employees are governed by the Code of Conduct and the Scheme’s ethics policy.

Because of the regulated environment listed above, there is a much reduced risk of conflict of interest as no member funds are ever transferred to a third party, the nature of medical scheme cover is short term cover. No contributions are repayable to a member if no healthcare events occurred during his membership.

Current levels of broker commission is transparently disclosed on the Council for Medical Schemes website.

With each quarterly Board of Trustees meeting, the trustees of the medical scheme declare any conflict of interest which is minuted and forms part of the meeting minutes.

All phone calls are recorded and any contact from a member is recorded on the membership file held within the MIP software system and can be reviewed on a future date.

GIFTING
No bribes, kickbacks or other similar remuneration or consideration shall be given to any person or organization in order to attract or influence business activity. Trustees and all employees shall avoid excessive gifts, gratuities, fees, bonuses or entertainment, in order to attract or influence business activity.

In order to further ensure the adherence to this requirement, the official policy of the business is as follows:

Any gifts or gratuities over the value of R1 000 in the aggregate from any other person, including such person’s associate as defined in Financial Services Board Notice 58 of 2010 shall be declared to the Scheme.  No gifts or gratuities or incentives over the value of R1000 may be given by any person in the Scheme, to any third party;

No gifts or gratuities may be accepted or given without written consent from the CEO, and all such gifts and accompanying documentation must be registered in the non-cash incentive gifts register. In exercising his discretion, the CEO must have regard to any commission regulations or other laws which may be breached by the receipt of such gift. A written statement from the giver explaining the reason for and purpose of the gift must accompany any request for authorisation. This provision applies, without limiting the generality of the aforegoing, also to invitations to any functions, including lunches, dinners, training interventions and prize-givings.

The gifts register shall be a book with fixed and numbered pages, similar to a minute book and all entries shall be made in chronological order in the book. No pages may be removed from the book. The gifts register shall be audited by the Scheme’s accountant on a monthly basis for the purpose of determining whether any gifts or incentives exceeded the aggregate value of R1 000.00. The results of the audit shall be communicated to the CEO. In determining whether any gift or incentive is to be allowed, the CEO shall have regard to this report.

INSIDER TRADING
Trustees and all employees of the Scheme will often come into contact with, or have possession of, proprietary, confidential or business-sensitive information and must take appropriate steps to assure that such information is strictly safeguarded. This information – whether it is on behalf of our Scheme or any of our members or affiliates – could include strategic business plans, operating results, marketing strategies, member lists, personnel records, processes and methods. Proprietary, confidential and sensitive business information about the Scheme, other companies, individuals and entities should be treated with sensitivity and discretion and only be disseminated on a need-to-know basis.

Misuse of material inside information in connection with trading in the company’s securities can expose an individual to civil liability and penalties. Under current legislation, Trustees and any employee in possession of material information not available to the public are “insiders.” Spouses, friends, suppliers, brokers, and others outside the Scheme who may have acquired the information directly or indirectly from an employee are also “insiders.” The following guideline should be followed in dealing with inside information:

• Until any material information has been publicly released by the scheme, an employee must not disclose it to anyone except those within the Scheme whose positions require use of the information.

Trustees and all employees will seek to report all information accurately and honestly, and as otherwise required by applicable reporting requirements.

Trustees and all employees will refrain from gathering competitor intelligence by illegitimate means and refrain from acting on knowledge which has been gathered in such a manner. Trustees and all employees of the Scheme will seek to avoid exaggerating or disparaging comparisons of the services and competence of their competitors.

Violation of this Code can result in disciplinary action being taken against the person, including possible termination of services. The degree of discipline relates in part to whether there was a voluntary disclosure of any ethical violation and whether or not the violator cooperated in any subsequent investigation.

MANAGEMENT OF CONFLICTS

LESSER CONFLICTS
When any staff member of the Scheme suspects a potential conflict of interest, that member shall be obliged to discuss the matter with his/her immediate superior. The content of the discussion as well as any decision made must be minuted. The superior and staff member will accept joint responsibility for the decision taken unless the decision is put forward for ratification to a more senior person in the company. In assessing whether a conflict is material or of a lesser nature, regard must be had to the impact that such a conflict will have on the Scheme’s reputation, financial loss and internal erosion of ethical standards.

All decisions made must be reported on a weekly basis to the CEO, by the most senior person involved in that decision.

MATERIAL CONFLICTS
Material conflicts must be discussed with the CEO before any decision is made. Only the CEO or person authorised by him may make the final decision regarding a material conflict.

MANAGEMENT AND MITIGATION
The executive management of the Scheme will review all conflicts on a quarterly basis and make recommendations regarding steps to avoid a recurrence of those aspects. The CEO will accept responsibility for the implementation of all steps necessary. Notice of the attention paid to conflict of interest must be minuted and the relevant extracts of the minutes must be made available to the Scheme’s compliance officer, the purpose of which is to enable the compliance officer to report on compliance with this policy.

Where a conflict is identified and a decision made, the nature of the decision must be communicated to the third party in writing as soon as possible. This applies regardless of whether the decision was made to cease doing business or continue with the business at hand despite the existence of the conflict. It is important for the preservation of the Scheme’s integrity that these disclosures are made at all times.  

Where any conflict of interest exists with a member of staff, they are urged to disclose this to the scheme’s ethics officer who will in turn disclose the conflict and assist the staff member in dealing with the situation. All members of staff have unrestricted access to the ethics officer.

STAFF TRAINING AND GENERAL AWARENESS
All Scheme employees must be trained on this policy. A copy of the policy must be provided to each employee  at inception of that employee’s duties and updated versions must be circulated as and when they are updated.

Moreover, all the Scheme’s members – existing and future, must be made aware of the existence of this policy. The policy must be posted on the Scheme’s website under the section “Internal Scheme policies”.  It is the responsibility of the Marketing and Operations Director to ensure that the provisions of this paragraph are adhered to.