The Financial Sector Conduct Authority (FSCA) has published Conduct Standard 2 of 2025 (the 2025 Standard). It sets out reformed conditions for pension fund benefit administrators under section 13B(1) of the Pension Funds Act, 1956.
The 2025 Standard aligns with the FSCA’s Statement of Need and Impact. In doing so, the FSCA ushers in a new era for pension fund regulation by formally replacing the outdated Board Notice 24 of 2002 (BN24 of 2002).
Key developments
BN24 of 2002 has not kept pace with broader regulatory developments. Since its publication, the regulatory landscape has evolved significantly. These reforms include the launch of Treating Customers Fairly (TCF), the 2014 Retail Distribution Review, and the implementation of the Twin Peaks model in 2018.
Yet BN24 of 2002 reflects none of these developments. It fails to capture TCF outcomes and does not address fundamental conduct areas that the 2025 Standard now covers. As a result, the FSCA ushers in a new era of modernised, conduct-focused expectations.
The FSCA undertook extensive stakeholder engagements to refine the regulatory requirements. The public consultation period ran from 29 July to 13 September 2021. During that time, the FSCA received more than 350 comments from 12 commentators.
Key issues raised included requests for clearer terminology, concerns about duplication for dual-licensed entities and questions about capital adequacy thresholds. The FSCA considered these inputs carefully. Consequently, they are reflected in the final 2025 Standard, ensuring that the FSCA ushers in a new era built on collaboration.
Key features of the 2025 Standard
The 2025 Standard introduces wide-ranging business principles that were absent from the 2002 framework. Benefit administrators must now demonstrate strong governance aligned with TCF outcomes. They must also implement clearly documented policies and define oversight responsibilities.
Additionally, the 2025 Standard sets out detailed fit and proper requirements. These include disqualifying criteria and competency thresholds. It also prescribes stronger outsourcing conditions and requires more robust administration and service level agreements. Administrators must maintain formal complaints-handling frameworks, enforce conflict-of-interest policies, and ensure clear communication protocols with funds and members.
Further obligations include strict data governance measures, minimum record retention periods, and defined audit and accounting standards. Administrators must also maintain the operational capacity needed to manage member data accurately and securely.
Through these reforms, the FSCA ushers in a new era of accountability and safeguards that aim to close longstanding regulatory gaps and prevent member prejudice.
Transitional timeline
Although much will continue to evolve, the FSCA has acknowledged the cost implications of these reforms. It therefore removed some of the more onerous requirements. These include relaxed auditing obligations and the removal of both the assurance requirement and the ZAR 3 million capital adequacy threshold.
Upon publication, the 2025 Standard replaces BN24 of 2002 with immediate effect. However, implementation will follow a staggered approach. Certain provisions become effective immediately, while others phase in over a 6-to-12-month transition period.
Ultimately, the shift from BN24 of 2002 to the 2025 Standard represents a fundamental transition. It moves the sector from a compliance-focused framework to one grounded in conduct and governance excellence. This transition reinforces operational integrity across South Africa’s pension fund administration sector. It also confirms that the FSCA ushers in a new era focused on customer outcomes and regulatory alignment.
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