SOUTH AFRICA: DRAFT CONDUCT STANDARD – PRESCRIBED CONDITIONS FOR RETIREMENT FUND BENEFIT ADMINISTRATORS
On 29 July 2021, the Financial Sector Conduct Authority (FSCA) published the draft ‘Conduct Standard - Conditions Prescribed in respect of pension fund benefit administrators’ (Draft Conduct Standard) for public comment.
The intention is that the Conduct Standard, once finalised, will replace Board Notice 24 of 2002 (Board Notice) which currently prescribes the conditions applicable to benefit administrators.
The FSCA advised in the Statement supporting the Draft Conduct Standard (published together with the Draft Conduct Standard) that, subsequent to the publication of the Board Notice, there have been significant regulatory and policy changes that have impacted the over-arching approach to the regulation of the financial sector. The FSCA identified the Board Notice as one of the regulatory frameworks which have not adequately evolved to incorporate the broader legislative and policy developments in the financial sector.
The Draft Conduct Standard repeats several of the conditions that are currently prescribed in the Board Notice (such as, for example, the conditions relating to administration agreements, the appointment of auditors and the maintenance of current assets and liquidity, to name a few). However, the requirements relating to some of the current conditions are expanded on and improved in the Draft Conduct Standard.
The Draft Conduct Standard also introduces several new conditions on benefit administrators (and other parties) and sets out the FSCA’s powers in the event of non-compliance with some of the conditions. The conditions include, amongst others:
- appointment of a ‘responsible key person’ by the benefit administrator to manage and oversee the business of the benefit administrator and to report to the FSCA on matters prescribed in the Draft Conduct Standard;
- compliance with the fit and proper requirements prescribed in the Draft Conduct Standard by a benefit administrator, its directors, senior managers, key persons and the head of a control function (where applicable);
- compliance with the conditions relating to outsourcing by benefit administrators;
- compliance with the conditions relating to data management, maintenance of records and retention of records; and
- establishment of a complaints management framework.
It is intended that the Draft Conduct Standard will result in improved administration services by benefit administrators to retirement funds, which, in turn, will lead to better outcomes for members of retirement funds.
Public comments on the Draft Conduct Standard are due to the FSCA on or before 13 September 2021. All submissions must be sent via email to [email protected].
The Draft Conduct Standard, including the supporting documents, is available here.