1 / 9

Retirement Funds Industry Secret profits, silent theft?

Retirement Funds Industry Secret profits, silent theft?. Presentation to Portfolio Committee on Finance Financial Sector Campaign Coalition 20 June 2006. Purpose & content of presentation. Financial Sector Campaign Coalition Background to Financial Sector Campaign

hhartman
Télécharger la présentation

Retirement Funds Industry Secret profits, silent theft?

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Retirement Funds IndustrySecret profits, silent theft? Presentation to Portfolio Committee on Finance Financial Sector Campaign Coalition 20 June 2006

  2. Purpose & content of presentation • Financial Sector Campaign Coalition • Background to Financial Sector Campaign • Nedlac Financial Sector Summit Agreements 2002 • Commitment to Retirement Funds Reform • Current Retirement Funds practices • Secret profits • Role of regulators • Disclosure, penalties • Remedies

  3. Financial sector transformation • Financial Sector Campaign Coalition (FSCC) • Coalition of 52 civil society organisations • ANC, SACP, COSATU, SACC, SACCOL, SAFOBS, Black Sash • SACP Red October Campaign 2000 • Make the banks serve the people • Single issue campaign • transformation of the financial sector so that it serves the needs of all South Africans

  4. Financial Sector Summit agreements • Nedlac Financial Sector Summit 2002 • Government, Business, Labour & Community constituencies : • Package of 13 financial sector transformation agreements • Retirement funds trustee training • Financial Sector Charter was one outcome of FS Summit agreements • Signed by 11 financial sector trade associations • Including retirement funds industry

  5. Secret profits, silent theft? • Revelations of secret profits and unscrupulous practices in the industry negates the commitment to transformation • Variety of unscrupulous business practices involved • Secret profits from “bulking” of bank accounts • Nothing wrong with bulking, but everything wrong with secret profits • Imprest funds • Profit-driven advice • Very worrying, especially where fund administrators do trustee education • Practices widespread in retirement funds administration • Appropriate spotlight on Alexander Forbes as biggest & influential • Smaller firms also admit wrongdoing • Extent of activity unknown

  6. Regulation & disclosure • We support call by Registrar of Pension Funds • “full and frank disclosure of all practices that amount to the making of secret profits or gaining an improper benefit” • Name and shame companies that fail to disclose • We welcome statements by Deputy Minister of Finance • Secret profits from bulking "is tantamount to taking away benefits from pension fund members without their knowledge or approval" • We commend Portfolio Committee for holding public hearings

  7. Regulation & penalties • Are Financial Services Board settlement agreements appropriate? • Do these agreements go far enough to stop unscrupulous practices & deter others? • If poor people were caught “taking away benefits” it would be called theft • They would be prosecuted to the full extent of the law • Repaying hundreds of millions & donating a small “fine” is tantamount to a slap on the wrist for a multi-billion rand company • Alexander Forbes admits “taking away” benefits of R386 million • Equivalent to stealing 75 million loaves of bread or 75 000 cellphones • Poor people are jailed for stealing 1 loaf of bread or 1 cellphone • Is there one law for the rich and another for the poor?

  8. Regulation & penalties • Need full public disclosure of all settlement deals with retirement fund administrators • Newspaper adverts claim Alexander Forbes donated R12m to FSB trust for • Consumer education, including Retirement Fund Trustee training • Donations must not be a “Get Out of Jail Free” card • Consumer education is not Retirement Fund Trustee Training • Full details of all Trustee Training must be provided to Nedlac in terms of its Financial Sector Summit agreements mandate • INSETA is responsible for Retirement Fund Trustee Training standards • All trustee education must comply with INSETA standards

  9. Remedies • Support calls for Judicial Commission of Inquiry into Retirement Funds Industry • Terms of reference must be wide • to expose extent and nature of practices • to ensure remedies prevent repetition • Justice must be seen to be done • The law must take its course • Repaying secret profits & FSB donations cannot replace prosecution • Government must speed up Retirement Funds law reform process • Introduce appropriate penalties for those who contravene law

More Related