FSB blitz on pen­sion fund ad­min­is­tra­tors

Weekend Argus (Saturday Edition) - - GOODDRINKING - BRUCE CAMERON

A slurry of fi­nan­cial ser­vices com­pa­nies, big and small, have been fined over the past three months by the En­force­ment Com­mit­tee of the Fi­nan­cial Ser­vices Board (FSB), the board’s ad­min­is­tra­tive jus­tice arm, for fail­ing to main­tain lev­els of liq­uid as­sets re­quired in terms of the Pen­sion Funds Act.

Jur­gen Boyd, the FSB’S deputy ex­ec­u­tive in charge of re­tire­ment funds, says the li­cens­ing con­di­tions of pen­sion fund ad­min­is­tra­tors in­clude re­quire­ments that they hold cur­rent as­sets that are suf­fi­cient to cover their cur­rent li­a­bil­i­ties and that they have liq­uid as­sets that can fund their op­er­at­ing ex­penses for two months.

The rea­son for the re­serves is to en­sure that they can de­liver the ser­vices they are con­tracted to pro­vide to re­tire­ment funds and ul­ti­mately the re­tire­ment fund mem­bers.

Boyd says FSB in­spec­tors, in an in­spec­tion blitz, have found a num­ber of ad­min­is­tra­tors to be non-com­pli­ant.

He says rea­sons for non-com­pli­ance in­clude the fol­low­ing:

Pen­sion fund ad­min­is­tra­tors hold liq­uid as­sets in un­ac­cept­able fi­nan­cial in­stru­ments and not, as re­quired, in cur­rent and/or sav­ings ac­counts with a bank or mu­tual bank in South Africa;

Some ad­min­is­tra­tors un­ac­cept­ably rely on the fi­nan­cial back­ing of hold­ing com­pa­nies – usu­ally in terms of a “let­ter of fi­nan­cial sup­port”;

Ad­min­is­tra­tors do not have the re­quired cur­rent as­sets and/or the re­quired level of liq­uid as­sets; and

Some ad­min­is­tra­tors are sim­ply ig­no­rant of their obli­ga­tions to hold liq­uid as­sets while some con­fuse their obli­ga­tions un­der other laws with those re­quired un­der the Pen­sion Funds Act, which is sep­a­rate and dis­tinct, im­pos­ing dif­fer­ent obli­ga­tions.

The lat­est com­pa­nies to be fined by the En­force­ment Com­mit­tee for con­tra­ven­ing the Pen­sion Funds Act for fail­ing to main­tain liq­uid as­sets equal or greater than eight weeks’ worth of their an­nual op­er­at­ing ex­pen­di­ture are:

Pre­scient In­vest­ment Man­age­ment, which was fined R19 300;

Life­sense Fi­nan­cial Ser­vices Ad­min­is­tra­tion, which was fined R10 000;

RF Ad­min­is­tra­tors, which was fined R22 299;

Grant Thorn­ton Cap­i­tal, which was fined R23 756; and

Maxim Em­ployee Ben­e­fits, which was fined R14 230. In other re­cent FSB En­force­ment Com­mit­tee ac­tiv­ity:

San­lam De­vel­op­ing Mar­kets was ined R100 000 and Safrican In­sur­ance Com­pany Lim­ited was fined R60 000 for con­tra­ven­ing the Fi­nan­cial Ad­vi­sory and In­ter­me­di­ary Ser­vices (FAIS) Act in that both in­sti­tu­tions con­ducted busi­ness with Ger­tel Al­gemene Han­de­laars, trad­ing as Multi Bro­kers, which was not an au­tho­rised fi­nan­cial ser­vices provider.

Zimkhita Jamjam was fined R25 000 for con­tra­ven­ing reg­u­la­tions of 2003, pre­scribed in terms of FAIS Act, in that from Novem­ber 30, 2010 to Au­gust 31 this year she can­vassed for, mar­keted and/or ad­ver­tised the ren­der­ing of fi­nan­cial ser­vices by a for­eign-based com­pany, FX­PRO Fi­nan­cial Ser­vices. FX­PRO Fi­nan­cial Ser­vices was not an au­tho­rised fi­nan­cial ser­vices provider nor was it law­fully ap­pointed as a rep­re­sen­ta­tive of an au­tho­rised fi­nan­cial ser­vices provider.

EMQ Train­ing So­lu­tions CC was fined R25 000 for con­tra­ven­ing reg­u­la­tions pre­scribed in the FAIS Act, in that from March 17, 2009 to Au­gust 31 this year EMQ can­vassed for, mar­keted and/or ad­ver­tised the ren­der­ing of fi­nan­cial ser­vices by a for­eign-based com­pany, AVA Fi­nan­cial. AVA Fi­nan­cial was not an au­tho­rised fi­nan­cial ser­vices provider nor was it a law­fully ap­pointed rep­re­sen­ta­tive of an au­tho­rised fi­nan­cial ser­vices provider.

Qmu­late, trad­ing as Mianzo As­set Man­age­ment, was fined R10 350 for con­tra­ven­ing the Pen­sion Funds Act by ad­min­is­ter­ing in­vest­ments on be­half of a pen­sion fund dur­ing the pe­riod from De­cem­ber 2010 to April this year with­out the ap­proval of the reg­is­trar.

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