Submission on Par 4 of the Submission on Par 4 of the General Financial Service Laws General Financial Service Laws Amendment Bill, 2008 to the Amendment Bill, 2008 to the Portfolio Committee on FinancePortfolio Committee on Finance

Done by Anne-Marie D’Alton, CEO of the Done by Anne-Marie D’Alton, CEO of the Principal Officers AssociationPrincipal Officers Association16 May 200816 May 2008

AgendaAgenda

Who is the POANeed for professionalisationWhat the Bill wants to achieveWill the Bill achieve its goal?Role of the RegulatorRole of the Board of TrusteesRecommendationsConclusion

Who is the POAWho is the POA

Non-profit organisationPromote the interest of principal

officers325 paid up membersBoard of ManagementFull time secretariat

Who is the POAWho is the POA

Aim:– Improve standard of governance– Forum for interaction– Voice of the PO’s– Raise issues with legislators…– Oversee learning & self development

Need for professionalisationNeed for professionalisation

Role of PO:– Most unrecognised occupation– Board knowledge fields– Execute resolutions of board of

trustees– Knowledge officer– Liaison– Operations

Need for professionalisationNeed for professionalisation

Elements of professionalisation– Standards– attitudes– behaviour

Elements already presentNeed for skilled, well rounded PO’s

What the Bill wants to What the Bill wants to achieve?achieve?

Registrar powers to:– Appoint PO’s– Terminate services of PO’s

Set out process of appointment…Set out fit and proper criteriaCompel PO’s to blow the whistle

Will the Amendment achieve Will the Amendment achieve its goal?its goal?

Not achieve in present formRole of Registrar– Supervise– Regulate

Not to interfere powers of BoT– Appoint fit and proper– Not employed or functionaries

Easy to shift responsibilityMonitor recruitment – not core

Will the Amendment achieve Will the Amendment achieve its goal?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

Will the Amendment achieve Will the Amendment achieve its goal?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

Recommendation: Par4(3)Recommendation: Par4(3)

View– Agrees

Gaps– Assume intention to prescribe

Recommendation– Registrar to consult when drafting

minimum requirements

Recommendation: Par4(4)Recommendation: Par4(4)

View– Partly agrees – No opting out

Gaps– Power to terminate although PO

renders service to BoTRecommendation– Registrar should not have power to

hire and fire– Power to confirm, vary or cancel

Recommendation: Par4(5)(a)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

Recommendation: Par4(5)(a)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

Recommendation: Par4(5)(a)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

Recommendation: Par4(5)(c)Recommendation: Par4(5)(c)

Two pronged approach– General views, gaps,

recommendations– Specific per sub-paragraph for

completeness sake– Prefer re-draft as recommended

Recommendation: Par4(5)(c)Recommendation: Par4(5)(c)

General view– Support notion of setting fit and proper

criteria– Reservations about how the criteria have

been or shall be formulatedGeneral gaps– 3 board categories on fit & proper

• Good character• Competence and capability• Personal financial soundness

Recommendation: Par4(5)(c)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

Recommendation: Par4(5)(c)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

Recommendation: S4(5)(c)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

Recommendation: Par4(5)(c)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

Recommendation Par4(5)(c)(i)Recommendation Par4(5)(c)(i)

View– Agree with inclusion of similar

provisionGaps– 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

Recommendation Par4(5)(c)(i)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

RecommendationPar4(5)(c)(ii)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

Recommendation Recommendation Par4(5)(c)(iv)(aa-dd)Par4(5)(c)(iv)(aa-dd)

View– Reservation about applicability and

impactGaps– Former PO’s never subjected to

proper investigations or disciplinary action

– Enforcement problematic– Role of competent court not included

Recommendation Recommendation Par4(5)(c)(iv)(aa-dd)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

Recommendation Recommendation Par4(5)(c)(iv)(ee)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

Recommendation Recommendation Par4(5)(c)(iv)(ff)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

Recommendation Par4(5)(d)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

Recommendation Par4(5)(d)Recommendation Par4(5)(d)

Recommendation– Advisory committee FIAS could be

involved with the assessment– Advisory committee already has

experience within this area of work

Recommendation Par4(6)Recommendation Par4(6)

View– Does not agree to include at this point

in timeGaps– Not well written– Different interpretations– Enforcement not clear– Implication of failure to act not clear

Recommendation

Recommendation Par4(6)Recommendation Par4(6)

Recommendation– Defer until more careful consideration

could be given

Annexure “A”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;

Annexure “A”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

Annexure “A”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.

Annexure “A”Annexure “A”

Competence & Capability– Qualification– Experience– Knowledge– Disciplined by prof body, regulatory

authority– Asked to resign due to negligence,

incompetence fraud or mismanagement;

Annexure “A”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.

Annexure “A”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.

ConclusionConclusion

The proposed amendments will go a long way to raise the profile of the PO

Improve work standards Improve how PO’s conduct

themselves

Contact detailsContact details

Principal Officer AssociationTel no: (011) 285 0036Fax no: (011) 886 1381E-mail: anne-marie.vanzyl@ods.co.zaWeb: www.poa.org.za