FSCA wraps up three-year investigation into Private Security Sector Provident Fund — and takes action

Board members lashed for failing in their duties and watchdog says transgressions and improper conduct are serious enough to warrant harsh penalties.
After decades of complaints from workers in the private security sector about the Private Security Sector Provident Fund (PSSPF), the Financial Services Conduct Authority (FSCA) has finally wrapped up an investigation that dates back to 2017.
As of February last year, the fund had R10-billion in assets and almost 600,000 members.
Following a supervisory on-site inspection of the fund in November 2017, the FSCA initially wanted to place the fund under curatorship, but, in September 2018, with the agreement of the trustees, appointed statutory managers to the board instead. The statutory managers then commissioned an independent forensic investigation, which was carried out by Ngidi Business Advisory.
Late last Friday, the FSCA revealed it had concluded its “long, detailed and complex investigation” of the PSSPF board of trustees. In releasing its findings, the FSCA noted that investigations by nature take time and that all implicated parties – former trustees, current trustees and the fund administrator Salt – had legal representation. All members of the board who could be traced were given an extensive opportunity to respond to the various assertions and allegations levelled at them. The FSCA’s findings included the following:
The board of the PSSPF deviated from its own procurement policy and processes in the appointment of service providers, without any justifiable basis.
Agreements in respect of the appointment of service providers were inconsistent with service providers’ tender proposals.
Tender negotiations with service providers took place after conclusion of the tender process, in violation of regulations.
The rates paid to board members during the 2017 financial period varied from R100,000 to R1.2-million and were inconsistent with the fund’s trustee remuneration policy.
Board members were paid almost R8,000 each for attending a golf day and a conference.
Chairpersons of each sub-committee received a fixed monthly fee of R7,460 in addition to their usual fee for attendance of meetings. This is not standard practice in the retirement funds industry and appeared to be solely for their personal enrichment.
Service provider agreements that have been called into question include those with Salt Employee Benefits, Bophelo Life
The FSCA has concluded that the board members:
Failed to take all reasonable steps to ensure that the interests of members, as per the Pension Funds Act (PFA), were always protected.
Failed in their fiduciary duty of acting with due care, diligence and good faith, by failing to ensure ...