The stripping of surplus funds from a number of South Africa’s pension funds in the 1990’s started a storm that has taken up until now to sort out and has seen high profile businessmen receive suspended sentences and fines for their part in the surplus fund stripping.
Members of the following funds were victims of surplus fund stripping and will begin to see the rightful amounts being paid to members, starting with the Mitchell Cotts fund members and beneficiaries. There is a R730 million being distributed to the members over the next six month period. The balance of the funds will all start to see funds distributed in the foreseeable future.
- Mitchell Cotts Pension Fund
- Datakor Pension fund
- Picbel Pension Fund
- Lucas SA Pension Fund
- Prestolite Pension Fund
- Power Pack pension Fund
- Sable Industries Pension fund
- Metal Industries Provident Fund (MIPF)
- Engineering Industries Pension Fund (EIPF)
- Metal Industries Group Pension Fund (MIGPF)
- Metal Industries Group Life and Provident Fund (MIGLPF)
The amount of legal fees and consulting services required to settle these cases are in the many hundreds of Millions, the case has taken over 6 years and needs to be a lesson to the Industry as a whole. The new broom of Edward Kieswetter swept clean for Alexander Forbes, many of whose senior management were implicated in the surplus stripping fiasco with Alexander Forbes making a plea bargian, paying a small fine and repaying an amount of stripped funds to members.
The last few years has seen some incredibly devious schemes hatched by financial advisors that have cost investors dearly, least of which are the PONZI schemes and property syndication schemes. The most important thing that the FSB can and is doing, is to police their members and affiliates, ensure that the public is aware of the requirements to act as a financial advisor and to hold those who contravene the regulations and rules accountable for their actions.
The financial services Industry has seen a lot of new regulations and requirements for financial advisors as a result of the many unsavory activities which have put the financial services industry in the spotlight over the last few years including the requirement to write exams by the end of 2011 in order to continue giving financial advice. There has been an outrcy from the financial advisors who believe they are all being atrred with the same brush as the fraudsters and are opposing the requirement. There are so many financial products available to investors that a good financial advisor needs the knowledge to be able to properly advise their clients, why the outcry?