Done by Anne-Marie D’Alton, CEO of the Principal Officers Association 16 May 2008

1. Submission on Par 4 of the General Financial Service Laws Amendment Bill, 2008 to the Portfolio Committee on Finance Done by Anne-Marie D’Alton, CEO of the Principal Officers Association 16 May 2008

2. Agenda • Who is the POA • Need for professionalisation • What the Bill wants to achieve • Will the Bill achieve its goal? • Role of the Regulator • Role of the Board of Trustees • Recommendations • Conclusion

3. Who is the POA • Non-profit organisation • Promote the interest of principal officers • 325 paid up members • Board of Management • Full time secretariat

4. Who is the POA • Aim: • Improve standard of governance • Forum for interaction • Voice of the PO’s • Raise issues with legislators… • Oversee learning & self development

5. Need for professionalisation • Role of PO: • Most unrecognised occupation • Board knowledge fields • Execute resolutions of board of trustees • Knowledge officer • Liaison • Operations

6. Need for professionalisation • Elements of professionalisation • Standards • attitudes • behaviour • Elements already present • Need for skilled, well rounded PO’s

7. What the Bill wants to achieve? • Registrar powers to: • Appoint PO’s • Terminate services of PO’s • Set out process of appointment… • Set out fit and proper criteria • Compel PO’s to blow the whistle

8. Will the Amendment achieve its goal? • Not achieve in present form • Role of Registrar • Supervise • Regulate • Not to interfere powers of BoT • Appoint fit and proper • Not employed or functionaries • Easy to shift responsibility • Monitor recruitment – not core

9. Will the Amendment achieve its goal? • Role of Board of Trustees • Direct, control & manage • According to rules • Ultimately responsible for recruitment, selection and appointment • Better placed to do so

10. Will the Amendment achieve its goal? • What role of Registrar should be? • Confine himself to supervisory role • Legislate fit and proper criteria • Compel funds to notify on appointments • Confirm, review & cancel appointments by BoT • Indicate the process to be followed if there are objections/disputes • Develop format for submission

11. Recommendation: Par4(3) • View • Agrees • Gaps • Assume intention to prescribe • Recommendation • Registrar to consult when drafting minimum requirements

12. Recommendation: Par4(4) • View • Partly agrees – No opting out • Gaps • Power to terminate although PO renders service to BoT • Recommendation • Registrar should not have power to hire and fire • Power to confirm, vary or cancel

13. Recommendation: Par4(5)(a) • View • Agrees with reservation • Gaps • No time period mentioned for Registrar to respond • No provision for procedure where funds fail to meet deadlines

14. Recommendation: Par4(5)(a) • Gaps continue… • No provision on the status of the PO while a fund awaits final determination of appeal • Fund without PO for some time, or • Fund and PO in limbo

15. Recommendation: Par4(5)(a) • Recommendation • Registrar to respond within 14 days of receiving notification • Appeal process should be mentioned • Period to lodge appeal – 21 days • Show good course – allow appeal • Objection to be suspended until final determination

16. Recommendation: Par4(5)(c) • Two pronged approach • General views, gaps, recommendations • Specific per sub-paragraph for completeness sake • Prefer re-draft as recommended

17. Recommendation: Par4(5)(c) • General view • Support notion of setting fit and proper criteria • Reservations about how the criteria have been or shall be formulated • General gaps • 3 board categories on fit & proper • Good character • Competence and capability • Personal financial soundness

18. Recommendation: Par4(5)(c) • General gaps continue.. • Criteria limited • No logic flow in presentation • Language not simplistic • Open to subjective interpretation • Burden of proof not with courts or competent authority • Open to many challenges

19. Recommendation: Par4(5)(c) • General gaps continue.. • Confusing who is ultimately responsible for appointment • Easy to blame either party • Against who will the PO lodge a complaint or dispute • Registrar find himself lost in fighting objections, appeals….. • Not clear how the law will deal with appeals

20. Recommendation: S4(5)(c) • General gaps continue.. • Confusing who is ultimately responsible for appointment • Easy to blame either party • Against who will the PO lodge a complaint or dispute • Registrar find himself lost in fighting objections, appeals….. • Not clear how the law will deal with appeals

21. Recommendation: Par4(5)(c) • Recommendation • Redraft entire 5(c) inline with Annexure A of submission to include full scope of the criteria • Good character • Competence and capability • Personal financial soundness • Window period to meet criteria • Allow Registrar to exemption when exceptional circumstance should arise

22. Recommendation Par4(5)(c)(i) • View • Agree with inclusion of similar provision • Gaps • No assessment criteria mentioned • Not all PO have formal financial or legal training • No provision for transitional arrangement for present PO’s to meet criteria

23. Recommendation Par4(5)(c)(i) • Gaps continue.. • Not comprehensive enough should also include capability as an and/or option i.e. PO should have either experience and qualification or just knowledge

24. RecommendationPar4(5)(c)(ii) • View • Agree with inclusion of provision • Gaps • No assessment criteria mentioned • Based on subjective prescience • Almost impossible to determine future conduct

25. Recommendation Par4(5)(c)(iv)(aa-dd) • View • Reservation about applicability and impact • Gaps • Former PO’s never subjected to proper investigations or disciplinary action • Enforcement problematic • Role of competent court not included

26. Recommendation Par4(5)(c)(iv)(aa-dd) • Gaps continues… • No mention about outstanding convictions • None of the actions of PO alone can result in a fund not being able to meet its obligations

27. Recommendation Par4(5)(c)(iv)(ee) • View • Powers extremely wide • Fear result in subjectivity • Gaps • Assessment criteria absent • Get involved in unrelated investigations • Cost implications • Malicious intent

28. Recommendation Par4(5)(c)(iv)(ff) • View • Agrees with some reservation • Gaps • No indication who will pay for the services • Fund and PO will have a say in the appointment • Advisory committee FIAS involved

29. Recommendation Par4(5)(d) • View • Agrees with some reservation • Gaps • No indication who will pay for the services • Fund and PO will have a say in the appointment • Advisory committee FIAS involved

30. Recommendation Par4(5)(d) • Recommendation • Advisory committee FIAS could be involved with the assessment • Advisory committee already has experience within this area of work

31. Recommendation Par4(6) • View • Does not agree to include at this point in time • Gaps • Not well written • Different interpretations • Enforcement not clear • Implication of failure to act not clear • Recommendation

32. Recommendation Par4(6) • Recommendation • Defer until more careful consideration could be given

33. Annexure “A” • Good character i.e. honesty, integrity fairness and reputation are qualities that are demonstrated over time: • No conviction of disciplinary or criminal offence – dishonesty, fraud or a financial crime • subject of adverse finding civil matter in connection with financial business, misconduct or fraud;

34. Annexure “A” • Good character Asked to resign for position of trust • Suspended or disqualified prof body, Regulators & licences revoked • Business placed under curatorship or liquidation • Not truthful and fair in dealings with customers, auditors…. • Demonstrated willingness to comply

35. Annexure “A” • Competence & Capability • demonstrate the competence and ability to understand the technical requirements of the operations of business of the fund, • inherent risks therein • management process required to conduct its operations effectively with due regard to the interest of all stakeholders.

36. Annexure “A” • Competence & Capability • Qualification • Experience • Knowledge • Disciplined by prof body, regulatory authority • Asked to resign due to negligence, incompetence fraud or mismanagement;

37. Annexure “A” • Personal financial Soundness: • As an indication of a person’s capacity to contribute to the soundness of the operation of a retirement fund and the protection of the interests of all stakeholders, the person should demonstrate a prudent management of his own financial affairs.

38. Annexure “A” • Personal financial Soundness: • subject of any judgment or award that remains outstanding or was not satisfied within a reasonable period • made any arrangement with his creditors, filed for bankruptcy, had assets confiscated or has been involved with proceedings relating to any of the aforementioned.

39. Conclusion • The proposed amendments will go a long way to raise the profile of the PO • Improve work standards • Improve how PO’s conduct themselves

40. Contact details • Principal Officer Association • Tel no: (011) 285 0036 • Fax no: (011) 886 1381 • E-mail: anne-marie.vanzyl@ods.co.za • Web: www.poa.org.za