Speaker 0:
We're joined this morning by the adjudicators office Nahi Isa and Mugo Luka Mani. And on my right hand side, we're joined by the FSC a from Wilma. We're gonna start off with a presentation from the adjudicator's office and then a presentation from the FSC A, after which we'll take questions.

Speaker 0:
You

Speaker 0:
thank you very much. So when we were having a discussion, we decided that today we are sort of going to just give you a brief background of where we are at and also where we are We going over the next 12 to 18 months.

Speaker 0:
If you have a look at that, you will notice that we have now gone back to pre-covid levels in terms of, um, in terms of complaints received, which is very concerning. It just tells you that whatever it is that we were complaining about before covid hit and the numbers went down a bit, we are back to normal issues with over 9000 complaints for the year ended March.

Speaker 0:
Also of concern to us is the fact that, um, we are closing more matters through determinations. If you look at that, we have closed, um, 500 or more determinations from the previous month from the previous year. So it tells you again that, um, compliance issues of concern. And, um, if you look at our annual report when it comes out later, you will see that

Speaker 0:
upwards of 90% of those, um, determinations we are actually finding in in favour of the complainants. So that is another further concern.

Speaker 0:
Um, you'll notice that in the year past, also settlements reduced. Remember that our when we also introduced the referred to fund process, we were trying to give funds an opportunity to settle matters, so that is not working out so well. And and so if you look at the numbers in terms of the

Speaker 0:
settlements and the determinations, it tells you that we are having to do more formal finalisation of matters than than

Speaker 0:
for than parties actually closing matters between themselves.

Speaker 0:
Um, that is a normal picture that you have come to appoint yourself with over the years. You'll notice that 82 83 odd percent of matters have to do with withdrawal benefits plus section 13, a compliance and also you. You must, when you read those two

Speaker 0:
graphs, you must consider that most of the people that are complaining about withdrawal benefit. It's just that the initial complaint is about the withdrawal benefit, but a substantial amount of them also has to do with 13 a compliance.

Speaker 0:
The employers have not paid contributions. I think the only thing I can say about this slide is that, um over the past year, we have noticed a

Speaker 0:
a creep in the number of matters that have to do with beneficiary funds. We use not to have beneficiary funds sort of featuring there. But you'll notice that our second last number there has to do with beneficiary funds. That is really because it's also a compliance issue because funds are just transferring benefits into beneficiary funds without doing the due diligence to say, Can they

Speaker 0:
can the beneficiary can the parents or the guardian handle the funds on behalf of the of the minor child? Unfortunately, the beneficiary funds are also

Speaker 0:
you know, they are also driven by this thing where they say we'll give you 300 rand a month because we want you to get to 18 and get something out, and I don't know who lives on 250 rand, a month. But maybe the beneficiary funds can show us

Speaker 0:
people in, in in high school or whatever that can come by on 250 rand a month.

Speaker 0:
So our message to you was really about back to basics. And I'm glad maybe, that we come immediately after lifetime Achievement Awards and also immediately after a graduation, because it's really about getting back to doing

Speaker 0:
those basic trustee judiciary duties. Are you collecting your contributions? Are you paying your benefits on time? If we were all doing all that, then I guess our work 82% of our work would go away. And then we'll be left with actually why the office was set up in the first place. The other issues.

Speaker 0:
So it's really about complying with the acts, the regulations, the rules and also what's creeping up. You would have seen a finding that we made against PSSPF in the previous weeks that was out there. That's really out there. Because a member comes says

Speaker 0:
the employer has not paid contributions. We issue a determination. A few years later, the member comes back again. Of course, the mon the amount has grown, but what does the fund do. The fund doesn't even realise that it had a previous determination that it should have enforced. They just tell you from the beginning, not even

Speaker 0:
acknowledging that there was something in between that says to you. I don't know what's happening at that fund. If people can give you a response like that when you go back and you say But there's another court order, they are totally oblivious to the fact that there was something else in between. So that doesn't help at all. So compliance with court orders is key.

Speaker 0:
So what is it that we

Speaker 0:
are trying to do? We are really trying to address the greatest challenges that we have, which is our real contributions. I'm and I'm glad that, um, we will touch on that. Uh, and that is also driven by the fact that now the latest determinations that we have been issuing you will see that we are proactive in addressing the issue of prescription. And I can tell you that

Speaker 0:
out of them

Speaker 0:
out of the determinations that we are issuing more or less 50% members are then affected by prescription. So we will tell them that a certain portion of what you want. You cannot recover. You can only recover up to three years, and so even if we are, you are going to see now where we tell you numbers in terms of how much. In terms of determinations we have issued in rent terms,

Speaker 0:
that will not be the complete picture, because the rest of the amount we have had to say to the member seven years of your contributions have prescribed. You can only have three years, and that falls fundamentally to you as trustees in the room that if your members have a situation where they can't even recover what they put in, and the fund itself has been

Speaker 0:
done absolutely nothing to try and recover on behalf of the member, then I am not sure that we will get to the kind of outcomes that was talking about for our for our members and also in terms of our real contributions. You must consider that there's general member prejudice when members complain. In most instances, they are fired

Speaker 0:
by the employer before the the the outcome, so it falls to the trustees and to the board to try and recover the contributions instead of then putting members on the back foot where they they act. They put their actual careers in jeopardy because they are raising an issue about an employer not paying, not paying, uh, contributions.

Speaker 0:
Um, again, Two of us touched on this. Maybe we were talking to each other when I was preparing this, the issue of the trust deficit. When we introduced the

Speaker 0:
I referred to fund process, one of the things that we were trying to do was to say, Try and resolve the issues amongst yourselves, But we find that most complainants, even where we say to them the fund has responded. We are happy with what the fund has said. What is it that the member says? The member says, No issue a deter

Speaker 0:
because I don't believe what the what the fund has said and also because we we don't want to close the door for the member to also be able to either appeal to the FST. Then we are forced to issue a determination primarily because there's a huge trust deficit with with members. But also I just thought I'd I'd share with you

Speaker 0:
a few numbers of why. Sometimes we sort of have more cases, and then we are unable to make headway on some of the issues that are really compliance related.

Speaker 0:
Um, and that has to do with, um, our failure to really make traction with the RT F process. You'll see there that we only managed to close 1560 metres using that process in the

Speaker 0:
in the previous financial year to march. But that is primarily because we we receive quite a lot of complaints and and unfortunately, uh, the private security sector fund drives most of that. And if I can just give you the statistics from just that one fund. So we received 3770 complaints against that one fund.

Speaker 0:
We issued 2390 determinations, of which 2373 were reliefs against the fund. Only 180 matters were closed through this process, and largely it's compliance issues. So we we

Speaker 0:
we are being forced to do work that a fund must actually do.

Speaker 0:
Um, and if you consider the number of members in this fund, you can just extrapolate the kind of prejudice for those that don't even know that they are, um, they, um

Speaker 0:
uh, contributions outstanding. Or there's there's something wrong. So it again falls to all of you in the room to say, What is it that you are doing about collecting a contributions? So now you must stop there.

Speaker 0:
Plan.

Speaker 1:
OK, so, uh, we were asked to say to speak about, uh, back to basics, and I just made a few notes about

Speaker 1:
what do we need to look at if we're going back to basics? What is

Speaker 1:
if you think about what is the purpose of the regulator? What is the purpose of the adjudicator?

Speaker 1:
That purpose is to install trust in the system. It's to ensure the safety and soundness of the financial system, protect financial customers and to encourage, um, investment in pension funds.

Speaker 1:
Because there's no member out there that wants to put their money into a pension fund. Where a person is, uh, takes that money and they're free to do whatever they want to do with it. And if something goes wrong, then there's no recourse, or they'll have to spend hundreds of thousands of rands in the high court having to litigate to to recover that

Speaker 1:
so going back to basics, I think we need to We need to think about really, what is the purpose of these two institutions, um, that have been installed in terms of legislation.

Speaker 1:
And these are structures that give, uh, strength to the system, and it actually helps you to sell your product.

Speaker 1:
So

Speaker 1:
whether you're a service provider, whether you're a trustee, uh, in whatever capacity you're sitting here today,

Speaker 1:
you should be taking actions that help to strengthen these, um, these institutions.

Speaker 1:
Um

Speaker 1:
So where does it? Where does it start? I think it starts with having to respect the system.

Speaker 1:
It you start by first respecting your customer, respecting the member, respect what their grievances are

Speaker 1:
and then respect the process once they've lodged a complaint. Because it really becomes very difficult for us, uh, at the adjudicators office to deal with a complaint when a pension fund is not responding to a complaint. Pension funds are licenced institutions.

Speaker 1:
Uh, you're regulated by the FSC. A. If you don't respond to, uh, complaints, you're not acting within the scope of your, uh, fiduciary duties within your legislated, uh, uh, duties and it really it ultimately what it does, it weakens the process.

Speaker 1:
Um, there is an RT F process that was introduced. That process gives you 30 days to resolve the complaint directly with your member.

Speaker 1:
That must be taken full advantage of. However, we don't see that. Er M In all, in all funds, there are some funds who will just,

Speaker 1:
uh, wait for the complaint, Wait for the 30 days to expire. Then we've got to, um, register a formal complaint, and then you've got to beg them for a response.

Speaker 1:
Um, when you are responding to a complaint, make sure you're giving us the adequate information.

Speaker 1:
A lot of the times, people are not happy with our decisions. They go to the tribunal,

Speaker 1:
you go to the tribunal, and then you give the tribunal more information than what you gave us. And then the tribunal sends it back to us to reconsider the matter. Whereas if you had given us that information in the first place, we could have dealt with it. Um, and the uh, complaint gets resolved much quicker.

Speaker 1:
Implementing of determinations, I receive the court applications where we are cited as interested parties

Speaker 1:
and at least two or three a month There's a court application by a member in their personal capacity using their personal funds to force either a fund or an employer to comply with the determination that has been issued.

Speaker 1:
And I can tell you, none of us here want to spend our money on litigation, and you can imagine the poor member having to do that when there's already a determination in place.

Speaker 1:
Um, if you don't agree with the determination, follow the due process. There's the tribunal. You can also go to the to the to the high court in terms of Section 30 P. But it doesn't help if

Speaker 1:
you're not happy with the determination. And then you go on

Speaker 1:
LinkedIn and you start writing the adjudicator doesn't know what she's talking about. The FSC A is full of nonsense. Um,

Speaker 1:
that doesn't help the system. It doesn't help, uh, people who are outside the industry to have trust in the system. So we really need to go back to those those basics. Uh, the adjudicator showed you the sta The statistics complaints are going up. It's it. It was at 11,000 before covid

Speaker 1:
during that covid year. It dropped to 7000

Speaker 1:
last year it was 8000. This year it's 9000 and I will take anyone in that year. Next year it's going to be more

Speaker 1:
so. Why are we not learning our lessons? Why we need to start looking at these, um, outcomes, and we need to start finding ways to address that. The majority of the complaints

Speaker 1:
are dealing with withdrawal benefits, and you have to ask yourself why Either the complaint is about there's a delay in the process

Speaker 1:
or the member is not happy with the value of their withdrawal benefit.

Speaker 1:
So it it says to me, There's either there's a lack of communication. Um, we're not using simple language to explain to our members how our benefits are calculated. What are the deductions? What are the fees? It's not being explained in a manner that a member an ordinary member can can understand.

Speaker 1:
Um,

Speaker 1:
member education.

Speaker 1:
I think it's very important for us to to

Speaker 1:
invest in member education,

Speaker 1:
and I think that will lead to

Speaker 1:
the system the trust being installed back into the system. Um, and we need to take these steps.

Speaker 1:
Um,

Speaker 1:
non-compliance, uh, the biggest area you saw, uh, in respect of non-compliance is section 13 A.

Speaker 1:
So

Speaker 1:
we have, um,

Speaker 1:
complainants that come to us at the stage when they have exited the fund or when they've exited the employer. They now want to claim their withdrawal benefit, and then they realise

Speaker 1:
the employer hasn't been paying the contributions.

Speaker 1:
But if you look at the legislation,

Speaker 1:
the fund is supposed to have informed the member within 30 days of the contribution not being paid. You're supposed to inform the member that your employer has not paid, and you are supposed to take action against the employer, not leave it up to the member to do that at the stage where some of this could become prescribed.

Speaker 1:
Um,

Speaker 1:
with that notification, even when we send notifications to our members, are we sending it in a language that our members understand?

Speaker 1:
How are we distributing that notification? Are we saying to the employer, the very employer that hasn't paid those contributions? Now please issue the notification letters to, um, your employees to tell them that you haven't paid those contributions, so we need to think about this differently. Let me talk about, um, municipalities.

Speaker 1:
Municipalities, for some reason in our country, are broke

Speaker 1:
and

Speaker 1:
I. I listened yesterday with keen interest, and I'm gonna talk a little bit about something that's outside of my area of expertise. But if we look at,

Speaker 1:
uh, what the Deputy president said yesterday about doing business with with, uh, with government, shouldn't we as pension funds also be looking at how we can do business, Do do business with pension funds, how we can how how we can do business with the municipalities? Isn't there ways that we can strengthen our municipalities? Because if you look at

Speaker 1:
municipality is not paying, not paying contributions for their members That tells you that paints a very bleak picture.

Speaker 1:
Um, something else I wanted to talk about, um is the the two part system.

Speaker 1:
I know a lot of people are very excited about the two point system. Personally, I'm not, uh, I'll be honest with you. I'm not. I'm not excited. And it's not a popular opinion. Um,

Speaker 1:
because what increased

Speaker 0:
queries coming through? Do you expect an increase in queries coming a

Speaker 1:
massive increase in complaints

Speaker 1:
because what the system is doing

Speaker 1:
and what nobody is really talking about, is it's locking members into pension funds

Speaker 1:
is locking members into pension funds. We talk about the early access, but that's really just a small part of it. They're talking about 25,000 rand, 10% up to a maximum of 25,000 rand,

Speaker 1:
and then they're selling. They're selling compulsory preservation Compulsory. Um, preservation. With that,

Speaker 1:
we've already taken one product off the shelf. We don't have provident fund or going forward. We're not going to have the provide and fund benefit anymore.

Speaker 1:
We've, um we've, uh, introduced compulsory and and utilisation two part system compulsory preservation. And then we want to start talking about auto enrollment.

Speaker 1:
And we get excited about this because now members are locked into our products

Speaker 1:
and, uh, they don't really have a choice to withdraw. But

Speaker 1:
are we? Are we really doing the right thing? Are we providing value for money? Why are members not out of their own choice staying in the products?

Speaker 1:
I think that's something we need We need to think about,

Speaker 1:
um, if we have an annuity that I buy an annuity for a million rand and I only get 5000 rand a month back,

Speaker 1:
Is that a great product to you?

Speaker 1:
I think we need to think about these sort of things.

Speaker 1:
Um, the next 12 to 18 months, um,

Speaker 1:
some of you may have seen the change in legislation. Uh, the accounting authority at the adjudicator is now the adjudicator. It used to be the, uh, commissioner of the financial sector conduct authority,

Speaker 1:
um,

Speaker 1:
feedback on ombud council activities. So I will be meeting with the with the chief.

Speaker 1:
We are going to be drafting procedural rules for complaints. Hopefully, in that we're going to include the power to force people to provide us with information. And if they don't, then there will be penalties for not responding to complaints.

Speaker 1:
Um, we are also, uh, there's legislation. Some of you who have been watching the legislation will know that the name of the office is going to change from the office of the pension funds adjudicated to the office of the retirement funds ombud.

Speaker 1:
And along with that, there will be a, um, an expansion of the mandate. The definition of complaint is going to be expanded. I don't want to get into too much of technical detail about that, because I want to give treasury their space to consider the comments that we've we've given,

Speaker 1:
um, there is the levy bill. I think a lot of you are already aware of how the Levy bill is, uh, operating and the coffee bill we are all waiting for. So

Speaker 1:
that's it. Thank you.

Speaker 0:
Thank you. Thank you. I am cognizant of the time. So I'm going to move across to

Speaker 0:
I kiss you.

Speaker 0:
Thank you. And good morning, everybody. Uh, just once again, congratulations to our lifetime achievers and all the graduates this morning. I think it's great that they're teaching. I think no one can actually retire. Anne Marie, we must all teach afterwards. And I think so you retirement is 74 at least.

Speaker 0:
Um so the importance of that is that you have all these case studies to really bring home the training that you're involved in. And hopefully that will be well into, um, your retirement as well. I just want also want to just mention

Speaker 0:
that I think we share the same vision and mission and mandate for the industry to ensure that, um, financial customers are protected, that we have an efficient financial sector and system. And I think on our side, we're really trying to ensure that we do it in an outcomes based approach. I think often times, um

Speaker 0:
we have a situation where we lose sight of the ultimate goal, which is the member. And I think it is a trust deficit that we will be constantly working on. So what we just want to mention is that in our regulatory mandate, which obviously comes from the Financial Sector

Speaker 0:
Act and the pension funds act, um, there are some key things that we've looked at, so we've already better down our regulated strategy.

Speaker 0:
Um, And for that, we've also published our regulatory plan. We've also, uh, worked on our supervisory plan that emanates from our strategy. Because if you've listened to our commissioner Kala, you would have heard that is very much focused on us being a strategy led organisation. Um, so from that, will it will. It informs everything we do, um, on a day to day basis. Um, also

Speaker 0:
so in terms of our regulatory plan, um, if you go to the document, please consult the A. The A right at the end is quite interesting. So you would have seen that we've already finalised the derivative standard the use of derivatives by time and funds. There are other areas that the section 13 a, uh, standard as well, as well as the determination that goes with that. Um, the Section 13 B standard is still in the work and some areas on the actuarial side.

Speaker 0:
So that's quite important from our side as well that you can look at. We will adjust the timelines because I think what we really want to do is to make sure that we give a snapshot of the items we've closed out, and maybe here and there because of the coffee process, we might be also closing out some other areas. So

Speaker 0:
the, um, as I said, our strategy strategy helps us to be, you know, look at the intended outcomes and our guiding principles, and we really want to be more preemptive and intrusive. So if we do raise queries, just know there might be follow up questions, especially when it comes to real contributions, our risk based and proportional approach also being transparent and consultative. You would have seen that in the process

Speaker 0:
that we've used, um, in terms of consulting on standards, guidance notices, interpretation notices also, um, transparency and, um, outcome space being comprehensive and consistent and also show having credible deterrence. So one of the things we're embarking on is already publishing our enforcement. Um,

Speaker 0:
report. So we've done that. Um, so we have published our enforcement actions and retirement fund. Should have seen the enforcement undertakings there. Um, also in terms of our supervisory plans. I just need to enlarge this piece.

Speaker 0:
You looking for that? Um, some of your your slides had about the TCF self assessment that was done. Was there any lessons learned from the returns on that assessment? So I think one Thanks for that question. I think one of the things that we found with the whole RDR

Speaker 0:
retail distribution review it was more focused on the insurance sector. So what we've done is we want to make that more impactful for the retirement funds industry. So we're really adjusting that to for the industry. I think Anna Marie had a workshop that I

Speaker 0:
assisted bed was a few years ago where we actually tried to customise it. So we really want to take that work. Also forward with your trustee toolkit plan. I know there was was a test case run on the trustee toolkit. When can we possibly see the roll out of the new trustee toolkit? So also on the trustee toolkits the modules have been finalised. We're busy with the story boards at the moment Arena is running with that process.

Speaker 0:
Um And then, as I said, we've done a lot of, uh, roadshow sort of workshops already. If you go to YouTube and you punch in F AC, a South Africa we've done a lot of, um, sessions with, especially with the municipal funds. So please go and take a listen. Also on the omni CBR. Um, but the municipal fund one I attended was quite insightful because there are pockets of excellence in Some of the municipalities

Speaker 0:
have been very successful in working with the asset forfeiture unit and found other strategies. And I think the lawyers in the room have been very successful in assisting, um, recovery of those of those, um, arrears. But please listen to that one. It's quite an insightful one, because in that online session that webinar, the municipal fund trustees, principal officers were there as well as those who,

Speaker 0:
um, deal with, um, this on an administration level. So I'll just skip through quite a few of them.

Speaker 0:
Um, and as I said, our consumer financial education because I and communication because I mention that I also heard, um, mention that so quite important that we also so there's a draught framework for trustee for consumer financial education That's been done. You've heard about the joint standard on cyber security and resilience. Very important. During Covid, we had two incidences of money going missing from pension funds bank accounts. So that's crucial.

Speaker 0:
Um Then again this week, we will be publishing collaboration also on CO as well as the transitional project. And I think touching on your points here Nas you'll see the toolkit there in the we also have a readiness and implementation plan for post Cofie. As you mentioned, it will be the office of the retirement funds ombud as part of the consequential amendments to the Pensions Funds Act. So really, the current

Speaker 0:
toolkit has got the governance modules, but you're going to receive not only the legal, financial and actuarial side those of you who have attended the webinars if you haven't again YouTube FSC a South Africa, Please go and listen to those webinars on the trustee toolkit that we did November last year that was run by Serena and her team. So just punch in the YouTube, you'll find it.

Speaker 0:
And for those of us who are old that we can't fall asleep at night, that's where we go and listen to those, um, so that's in the two part system as well Readiness and implementation plan in terms of our supervisory plan. Now, supervisory plan hasn't been published. If we have an approved combined supervisory plan that the deputy commissioners have signed off on, they might publish a high level one, for public consumption.

Speaker 0:
And I'm gonna skip through on the enforcement actions because I'm not gonna steal ARD Van der here and also in the interest of time. But he's doing road shows, so he tells me starting middle of July. So please go on the look out for our enforcement actions. This is where all the penalties

Speaker 0:
of over 100 administrative penalties over 100 million that we've issued the enforceable undertakings on pension funds. The three there, um, So please look out for that. I've mentioned the the three, and no surprises for the first one there, Um, and then, of course, really, um, empowerment for decision makers such as yourself. So please look out for that Dr Draught Financial, um,

Speaker 0:
education framework, the transformation of the financial sector paper as well as our financial inclusion paper, our paper on unlinked assets, of which, sadly, pension funds make up half of what is the entire financial sector. The set of recommendations and next will be our sustainable finance work that we're doing. We want to work with all of you to come up with taxonomies definitions for infrastructure and how to really concise that. How do we measure

Speaker 0:
that? How do we report on that? And I'm here with who's heading up that team looking at the financial statements disclosure as well as the disclosure in your quarterly reports that will be coming out soon. And I think in closing just my parting remark would be, and I'm just giving you the links there. Please make sure we are all the strongest link. We all want to make sure that the trust deficit does not find a space in our industry

Speaker 0:
and my and and I think we want we all want to be the strongest link in the value chain Principal office trustees. Please make sure your funds are up to date your rules, your transfers, your responses to your complaints. Um, all of that because it really affects minimum benefits. We seeing increases in unallocated amounts in the financial statements. Please make sure, because when people leave and they need their money, they need their minimum benefits. And sometimes it's quite sad because it's a death benefit.

Speaker 0:
Um, and it affects the beneficiaries. So my last question is, what will be your legacy? What will be our legacy as we collaborate and work together and as a conduct regulator, it's not about us and them anymore. It's all about collaboration and working together. Please comment on our standards. Those of that are based in Cape Town. We've got a wonderful opportunity to see the bill through its paces, hopefully late later this year.

Speaker 0:
Thanks. Thank you to fly a bit. No problem. Thank you very much for that. I think the private security sector case and the the enforcement action that's been taken on that has highlighted the fiduciary responsibilities of trustees and not just trustees, but that of the principal officer not to the board, but to the members as well has been highlighted. Um, I see our time is up, but I'm going to open if there are any questions from the floor.

Speaker 0:
Mhm.

Speaker 0:
But listen to the municipal funds. There's some success stories and some very good pointers. For the 13 a workshops, there'll be more 13 a workshops and trustee workshops as well. And then, of course, road shows on enforcement.

Speaker 0:
You can tell us there what you think we should be doing. More of or less of. Thank you. Please check out the links. We will distribute the presentation so that the links can be followed. Thank you very much for your time. Thank you very much. Thank you. Thank you.