COFI will redefine the OPFA’s role and scope

The Conduct of Financial Institutions (COFI) Bill will introduce significant legislative amendments that will affect the mandate of the Office of the Pension Funds Adjudicator (OPFA).

In its 2024/25 annual report, the OPFA said the COFI Bill is expected to be tabled in Parliament in the 2025/26 financial year.

“The OPFA is actively preparing for the implications of this legislation, to ensure it remains aligned with its position as the preferred arbiter of choice in resolving pension fund disputes. The organisation will also maintain close engagement with key stakeholders, including the National Treasury, FSCA, and the Ombud Council, to ensure a seamless transition and compliance with the new regulatory requirements,” the report said.

Amendments to the Financial Sector Regulation Act (FSRA), effected through COFI, will rename the OPFA to the Retirement Funds Ombud and the Pension Funds Act (PFA) to the Retirement Funds Act. This is in line with a project by National Treasury and the FSCA to eliminate unnecessary jargon and for all types of pension funds to fall within the umbrella term “retirement fund”, the OPFA said.

Nondumiso Ntshangase, senior legal adviser at the OPFA, said COFI may affect the Office’s mandate by expanding the definition of “complaint” to introduce “advice”.

According to Deputy Pension Funds Adjudicator Naheem Essop, the expansion of the definition of a “complaint” to include not only disputes or grievances, but also issues arising from financial “advice” could empower the OPFA to investigate and adjudicate cases where poor or misleading advice has led to adverse outcomes for retirement fund members – an area that previously may have fallen outside its jurisdiction.

The annual report states: “There is concern about including advice or intermediary services under the RFO’s jurisdiction, as this could lead to, among other things, jurisdictional overlaps with intermediaries handling both retirement funds and other products. The Ombud Council will review co-ordination measures between ombud schemes to prevent complainants whose issues relate wholly or partially to advice or intermediary services from being sent from ‘pillar to post’.”

Ntshangase said COFI also proposes that the definition of “complaint” includes a requirement to accept oral complaints. She said this might create uncertainty because complaints might not be captured correctly, leading to potential delays in finalising them.

There will also be financial implications because oral complaints will require independent transcription to ensure accurate records if the matter is reviewed or appealed. The storage of recordings will incur costs.

The proposed amendments will also mandate the sharing of information between ombuds and the FSCA. “This is positive, as it creates an opportunity to establish a system for sharing information, the objective of which should be to reduce systemic issues giving rise to common types of complaints in specific retirement funds,” the annual report said.

Ntshangase said COFI will expand the definition of “retirement fund” to include public sector retirement funds, thereby extending the OPFA’s jurisdiction to address complaints relating to public sector funds.

The annual report said the latest draft of COFI includes a proposal pertaining to section 37C of the PFA, which deals with the disposal of death benefits in a retirement fund.

In its comments on the draft, the OPFA proposed that a full consultation process should take place – including workshops with relevant stakeholders in the retirement industry – before section 37C is amended.

“If the proposal is accepted by National Treasury, this will present an opportunity for the OPFA to engage meaningfully with the relevant stakeholders on the appropriate ways in which the issues pertaining to section 37C of the Act can be addressed. Similar comments were submitted by the OPFA on the second draft of the COFI Bill.”

Draft Rules for the OPFA

The anticipated amendments to the OPFA’s governing legislation, per the proposed amendments to the FSRA that will be affected via COFI, is one of the factors that has shaped the Ombud Council’s recently published draft Rules for the OPFA.

“These proposed amendments have been considered with a view to mitigating the need for further changes when those provisions take effect – to the extent possible within the existing legislative framework,” the Ombud Council said in the accompanying Statement of Need.

The Ombud Council – the statutory regulator of ombud schemes – published the draft Rules on 30 September, and interested parties have until 14 November to submit comments.

The draft Rules aim to clarify procedural matters regarding the operation of the OPFA, while maintaining consistency with the PFA and the objectives of the Ombud Council, Leanne Jackson, the Chief Ombud of the Ombud Council, said in the Invitation to Comment.

“The draft Rules do not introduce material changes to the Adjudicator’s complaint-handling processes or impose new obligations on funds, employers, or other stakeholders and are primarily intended to enhance stakeholder clarity, fairness, efficiency, transparency, and co-ordination,” Jackson said.

Ombud system reforms

National Treasury’s proposed reforms for the country’s financial ombud system envisage establishing a single scheme independent of both the government and the financial sector.

The first phase of the reforms was achieved on 1 March last year when the National Financial Ombud Scheme (NFO) officially opened its doors. The NFO was the outcome of the voluntary amalgamation of four previously separate industry ombud schemes – those for banking, credit, long-term insurance and short-term insurance.

For now, the OPFA will remain separate from the NFO because National Treasury’s view is that the transition of the OPFA to the RFO will take place over a longer period. This will be reconsidered in the median term (about five years), once the NFO has stabilised, the annual report said.