FSCA releases two PFA Guidance Notices

The Financial Sector Conduct Authority (FSCA) has released two new guidance notices, No 5 and No 6 of 2018, in terms of the Pension Funds Act 24 of 1956 (the Act).

Guidance Notice 5 provides guidance on the process where the Financial Sector Conduct Authority (Authority) received applications for the registration of rules or the alteration, rescission, addition or consolidation of rules (rule amendments) where queries were raised or additional information requested and the fund fails to provide the required information or response to queries within the prescribed time.

Where funds fail to provide the required information or response to the Authority’s query, the relevant cases remain open on the Authority’s system for extensive periods of time. This places a burden on the Authority’s record base and causes difficulties for the Authority to manage cases within the agreed service level periods and the allocation of the service fees for accounting purposes. Further, failure to ensure that the applications for registration of rules and rule amendments are finalised results in funds not being finally registered or having to operate in terms of registered rules that do not align with their intended operation.

Guidance Notice 6 provides guidance on the process and time period for the recovering of arrear contributions by an attorney on behalf of a fund and the payment thereof into the fund’s bank account.

Section 7D of the Act requires a board of management (board) of a fund to, among its duties, ensure that proper control systems are employed by the board and to take all reasonable steps to ensure that contributions are paid timeously to the fund in accordance with the Act. Regulation 33 made under the Act further requires boards of retirement funds to take action in the event of the non-payment of contributions by employers.