|
Category:
Insurance
News /
Life
Insurance /
Regulatory
Bodies
/ June 2006
FSB revokes pension administrator
The
Financial Services Board (FSB) has suspended the approval of IME
Actuaries and Consultants (Pty) Ltd (IME) to act as professional
benefit administrators of pension funds.
The
move by the registrar of pension funds follows a complaint from a
pension fund that IME had charged the fund R2 561 238 to extract
data needed for its surplus apportionment scheme from their records.
Quotations subsequently requested by the FSB from six different
administrators for similar work, varied between R116 000 and R540
000.
FSB
deputy registrar of pension funds, Jurgen Boyd, says IME was asked
to give a detailed breakdown of the professional services rendered
by the firm that would justify an account of R2, 56 million.
“IME, as a benefit administrator approved in terms of section 13B of
the Pension Funds Act, 24 of 1956, is a financial institution in
terms of section 1 of the Financial Services Board Act, 97 of 1990.
“A
pension fund administrator, as a financial institution, as well as
its directors, officials and employees, have certain fiduciary
duties towards the pension funds for whose administration they are
responsible, including the requirement at all times to observe the
utmost good faith and to exercise the care and diligence required of
a trustee in the exercise or discharge of his or her powers and
duties.
“The seriousness of this obligation in relation to financial
institutions is underlined by the wide powers given to the registrar
by section 6(2) of the Financial Institutions (Protection of Funds)
Act, 28 of 2001. For the purposes of ensuring compliance with the
requirements of the law in general and more specifically in this
instance, the requirement of utmost good faith, the registrar may by
notice direct the institution to furnish information within a
specified period or to appear before the registrar for questioning.
“Under these circumstances, where an approved administrator of
pension funds charges an amount of R2 561 238 for ‘services’ which
should not exceed, at best, R540 000, the question arises whether or
not such an administrator should be allowed to continue in business,
irrespective of any pending litigation or ‘commercial dispute’
between the administrator and any fund.
“The registrar has instructed IME not to enter into any new
contracts and make appropriate arrangements for the transfer of its
present work to other administrators by not later than 29 September
2006. IME must also advise the board of management of each of their
funds of this suspension.”
Relevant Legislation
In
terms of section 13B of the Pension Funds Act, 24 of 1956 the
Registrar of Pension Funds is allowed to suspend or withdraw the
approval of a professional benefit administrator of pension funds:
Restrictions on administration of pension funds
1. No person shall administer on behalf of a pension fund the
investment of such a pension fund, or the disposition of benefits
provided for in the rules of the fund, unless the registrar has in a
particular case or in general granted approval thereto and the
person complies with such conditions as the registrar may from time
to time determine in the particular case or in general.
2. Approval in terms of subsection (1) may be limited to the
performance of specified functions.
3. Applications for approval in terms of subsection (1) shall be made
in the manner be accompanied by the fee prescribed by regulation.
4. If the registrar deems it desirable in the public interest he may on
such conditions, to such an extent in such manner as he may deem
fit, exempt any person or category of persons from the provisions of
this section, and may at any time revoke or amend any such exemption
in a similar manner.
Source: ITInews – Insurance
Times and Investments Online
www.itinews.co.za
 |
