Interim curator takes the reigns at Pro Sano

The Pro Sano Medical Scheme will have to wait till 30 April 2007 to find out whether the interim curator appointed to run the scheme will be made permanent.

The Cape High Court granted the request for an interim curator brought by the Registrar of Medical Schemes last Friday.

The High Court ruling followed the resignation of the scheme's principal officer, Penny Moiloa. Moiloa and six of Pro Sanos trustees provided affidavits in support of the Registrars application.

Mr Johannes Malose Seoloane was appointed by the court as curator, who will "generally take control of and in the place of the board of trustees manage the business of the Scheme in accordance with the provisions of the Act and the rules of the Scheme." Seoloane will also "exercise all powers which would ordinarily vest in and be exercisable by the board and/or principal officer of the Scheme, whether in terms of the Act or the rules of the Scheme".

The Pro Sano Medical Scheme is financially sound

One often associates curatorship with serious financial problems. However, curators can also be placed at firms before the financial situation gets out of hand. Pro Sano is not in serious financial difficulty at this time and the appointment of a curator should ensure that the company trades out of its current difficulties.

The Registrar of Medical Schemes went to lengths to assure current members and suppliers of the scheme that it was in safe hands and that business would continue as normal.

Excerpts from the High Court ruling include: "Members and suppliers have no reason to be concerned about the payment of claims or the administration of the medical scheme. The administration of the scheme will be strengthened by the provisional curatorship."  And  "whereas the medical scheme experienced significant deterioration of financial status during the past financial year under the tenure of the Board of Trustees, the scheme's financial position is still sound. The Registrar is confident that the decline of the financial status of the scheme will be rapidly turned around under the effective management of a curator."

Yet another trustee problem

A number of concerns have been raised in recent times about the education and standard of trustees appointed to South African pension fund schemes. This case supports the view that these concerns apply equally to other regulated financial services industries.

An independent investigation into the Pro Sano Medical Scheme revealed that three of the scheme trustees had criminal records, and a fourth had received remuneration from a broker company with ties to Pro Sano.

The Medical Schemes Act makes it clear that persons appointed to a medical scheme board of trustees must be fit and proper: "Every medical scheme shall have a board of trustees consisting of persons who are fit and proper to manage the business contemplated by the medical scheme in accordance with the applicable laws and the rules of such medical scheme." In addition, 50% of the members of the board of trustees should be made up of members of the medical scheme.

Specific guidance is given on disciplinary steps which should be taken if a trustee is found to be lacking: "The Council may, by notice in writing, remove from office a member of the board of trustees of a medical scheme if it has sufficient reason to believe that the person concerned is not a fit and proper person to hold the office concerned."

With trustees being in the news so much in recent weeks, we won't be surprised if the various financial services regulators consider measures to improve the standards and knowledge of individuals appointed to these positions of trust.

Editor's thoughts:
An appointment to a medical scheme or pension fund board of trustees comes with tremendous responsibility. These positions require that individuals familiarise themselves with the cumbersome legislation contained in the Medical Schemes Act or Pension Funds Act and the rules of the relevant medical scheme / pension fund. Do you believe there should be more rigorous appointment standards for trustees?  Send your comments to [email protected].