The Financial Sector Conduct Authority (FSCA) has launched a seminal discussion paper on Unclaimed Assets that have accumulated to almost R90 billion across the financial sector.
\nThe authority this week said the majority of these assets are in retirement funds.
\nIn a statement, the FSCA said the discussion paper builds on work done it had done with the National Treasury to find a solution that will lead to increased disbursements of unclaimed assets to beneficial owners.
\nFSCA Commissioner, Unathi Kamlana, said work is continuing to establish the \u201ctrue value of unclaimed assets in the sector, given that these assets are held by various financial institutions, and not only by retirement funds\u201d.
\nHe said one big hindrance to disbursing these funds is the lack of a common understanding of what constitutes dormant or unclaimed assets, and the lack of reliable data.
\n\u201cWe recognise that good progress has been made but as the FSCA, we remain concerned because ultimately, we have to consider whether customers, and beneficiaries in this case, are being treated fairly. It is quite clear that we have to improve the outcomes for customers and that\u2019s what this paper is trying to achieve,\u201d said Kamlana.
\nThe authority said dealing with unclaimed assets is a complex task, with many moving parts across different sectors of the economy.
\nThese assets include:
\n\u2022\tRetirement fund benefits
\n\u2022\tBank deposits, including foreign currency deposits
\n\u2022\tParticipatory interests in collective investment schemes
\n\u2022\tLife and Non-Life Insurance policies
\n\u2022\tSecurities
\nThe FSCA said the discussion paper considered international unclaimed assets frameworks to determine the definitions, management and reporting of unclaimed assets.
\nThe paper also outlines reasons for the nature and extent of the problem of unclaimed assets in South Africa, which vary by sector.
\nThe most common reasons are:
\n\u2022\tAsset owners’ failure to keep financial institutions updated with their contact details and the personal details of their beneficiaries; and inform their beneficiaries of the existence of the assets and the institutions where it is held.
\n\u2022\tInadequate record keeping by financial institutions and intermediaries in the value chain.
\n\u2022\tInconsistency in approach to the identification and treatment of unclaimed assets (including reunification efforts) both within market segments and across the financial sector overall.
\n\u2022\tFailure by employers to provide retirement funds\/administrators with complete details of the members of the fund.
\n\u2022\tChanges in intermediaries and administrators.<\/p>\n
The FSCA proposes 13 recommendations in support of a holistic and consistent approach to the treatment of lost accounts and unclaimed assets within the financial sector.
\n\u201cOne of the most significant proposals is the establishment of a single Central Unclaimed Assets Fund into which all unclaimed assets, once identified as such, should be transferred and managed on behalf of the sector.
\n\u201cAlternatively, such unclaimed assets can be transferred into the National Revenue Fund for the same purpose,\u201d it said.
\nKatherine Gibson, FSCA Deputy Commissioner, said the FSCA paper was intended to avoid a build-up of unclaimed assets in the future.
\n\u201cWe are approaching this from a fairness point of view on behalf of customers, most of whom are from vulnerable backgrounds. This fits in well with our wider consumer protection framework,\u201d said Gibson. <\/p>\n
Source: South African Government News Agency<\/p>\n","protected":false},"excerpt":{"rendered":"