After extensive consultations starting in 2022, the Financial Sector Conduct Authority (FSCA) released a detailed response in March 2024 to the feedback on its Discussion Paper, "A Framework for Unclaimed Financial Assets in South Africa." This response addresses stakeholder concerns and reiterates the FSCA’s commitment to enhancing transparency and accountability in the unclaimed benefits sector. Part 3 of the response document outlines the FSCA’s proposed next steps.

 

First and foremost, the FSCA has committed to developing a standardized framework that supports its objective of systematically reducing unclaimed assets and ensuring these are managed with greater efficacy and accountability. This framework would mandate enhanced requirements for financial institutions regarding the identification, monitoring, tracing, and reporting of unclaimed assets.

 

The proposal to establish a central unclaimed assets fund was a specific concern that generated considerable debate among stakeholders. While the potential benefits of enhanced efficiency and transparency were acknowledged, significant concerns about governance and the viability of alternative solutions, such as transferring assets to the National Revenue Fund, were also raised.

 

The FSCA recognises the significant complexities involved in transferring assets to a centralized fund. It consequently plans to proceed with caution, prioritizing the establishment of a central fund specifically for retirement fund benefits. This decision is informed by the current robustness of the identification and monitoring processes within the retirement funds sector, which are more advanced than those in other financial sectors. Ultimately, the FSCA intends for the National Treasury to oversee and authorize the setup of this new centralized fund.

 

This step would involve transferring the governance of the central unclaimed retirement benefit fund from the Pension Funds Act to the Financial Sector Regulation Act, with provisions flexible enough to later include other assets.

 

Lastly, the FSCA emphasizes the importance of ongoing dialogue with industry bodies and the public to refine its approach, ensuring that future regulatory measures are well-informed, effectively targeted, and aligned with the sector's needs.

 

The FSCA response and comment document was used as a reference for this article.  

Click here to review the FSCA Response and Comment Document.

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