Is enough being done to connect the dots?

With the Twin Peaks model of regulation, the financial services industry has been ushered into an era of increased enforcement and accountability.

But as the proverb goes: what’s good for the goose must be good for the gander. If the Financial Services Board (FSB) expects insurers and advisers to hold themselves to higher standards, does this mean that the industry regulators will also conduct themselves similarly?

The FSB has been outspoken about the industry’s need to resolve internal issues. But how is the regulator progressing on resolving the issue of unclaimed benefits, an issue which it desperately needs to resolve.

Coming to a head

This issue has been going on for some time and tensions reached boiling point two years ago when the FSB was taken to court over the issue. While the court ruled in the FSB’s favour, it still left many in the industry asking why unclaimed benefits remains a bugbear.

The FSB addressed this at a recent press briefing where Takalani Lukhaimane, Manager for Pensions Enforcement and Surveillance at FSB, set the record straight regarding some issues.

“It is important to understand that the responsibility and accountability to trace and pay benefits, in either an active or unclaimed benefit fund, remains the responsibility of the trustees even if it was outsourced to a service provider like an administrator or tracing agent. Where funds remained registered for an extended period of time, they were transferred to a registered unclaimed benefit fund whose sole purpose is to trace and pay such members or beneficiaries,” said Lukhaimane.

Legacy issues

The above explanation is all good and well; however, the fact remains that there are still a number of benefits which remain unclaimed. In explaining why this is the case, Lukhaimane pointed out that the regulator is dealing with legacy issues that have been in existence since the days of apartheid.

“The tracing of unclaimed benefits is further exaggerated by the huge number of migrant workers that were employed, either as illegal immigrants or not willing to provide their actual names and identification numbers to employers as it would have caused them not finding a job or be sent back to their countries of origin. As funds do not have accurate member data or contact details, it has a major impact on the ability of funds to trace members or their beneficiaries. This practice is however still continuing in certain sectors and industries. This can be noted especially in respect of the mining sector, motor sector, metal and engineering sectors,” said Lukhaimane.

A need for action

At the end of the day, the above explanation is meaningless if there is no demonstrable effort put in place to address and resolve it. To its credit, the FSB is putting these efforts into place.

“The FSB is continuing with its project called Taking Regulation to the people. It is a project which is aimed at educating consumers about financial matters. The FSB pension department uses the platform to assist members to complete claim forms and liaise with the retirement funds to ascertain whether there is an unclaimed benefit. Since February 2017, five provinces were visited in South Africa with four provinces remaining. The FSB has employed additional staff to handle unclaimed benefits queries,” said Lukhaimane.

The second initiative is the revitalization of inter-ministerial committees which comprises of distressed mining towns and communities. This is being driven by the Department of Planning, Monitoring and Evaluation within the FSB.

Finally, the FSB has launched an Unclaimed Benefits Search Engine, which is a digital solution to assist the industry and members of the public. The search engine can be accessed by following this link.

Editor’s Thoughts:
The success of the initiatives will be determined by the amount of unclaimed benefits that are returned to those who are entitled to it. Yes, at least there are efforts in place. However, is enough being done to connect the dots? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected].

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