Legislation is being prepared to prevent a repeat of the secret profits scandal exposed by Personal Finance.
Jonathan Dixon, the chief director of financial sector policy at the National Treasury, told the Institute of Retirement Funds' conference that there are plans to grant the Financial Services Board additional powers so that it can deal with trustees who fail in their fiduciary duties, as well as take action against administrators and other service providers failing in their fiduciary duties to a fund.
Dixon expressed concern that some retirement fund administrators are trying to get trustees to agree retrospectively to the secret profits that the administrators made out of bulking the bank accounts of the funds they administer.
Trustees must be wary of any such agreement, he says.
He says trustees must remember that such agreements could make them liable to being found to have breached their fiduciary duty, and expose them to claims from retirement fund members.
Dixon says the FSB investigation into secret profits being made from practices, such as bulking retirement funds' bank accounts to earn undisclosed interest, is still on-going.
He says any settlement reached, such as the R386 million plus a R12 million fine paid by Alexander Forbes,
will not preclude possible further criminal charges.
Dixon says trustees have a responsibility to monitor the actions of administrators and other services providers to ensure that secret profits are not made at the expense of retirement fund members.
He says poor governance by trustees provides fertile ground for the exploitation of fund members.