When a public protector leaves his office because the regulator is unable to give him the support to carry out his duties, this should be of utmost concern to the public that is supposed to be protected. Given the current legislative environment that negatively impacts on the Pension Funds Adjudicator’s (PFA) ability to carry out his duties, combined with chronic under-funding, current incumbent Vuyani Ngalwana will not be renewing his contract, which expires in March.
This week Ngalwana lashed out against the legal framework that effectively makes a mockery of his office. Despite the premise that a ruling by the PFA carries the same powers as a high court ruling, Ngalwana argues that provisions of section 30P of the Pension Funds Act make a mockery of his office. By using this provision, life companies have been able to undermine his rulings by making applications to the high court to have the rulings overturned. This is a subtle, but important, point — an application versus an appeal means that the case is effectively re-submitted from scratch as opposed to an appeal, which would review the existing evidence and arguments.
Going the route of an application to overturn a ruling, means that, in order not to be prejudiced, the complainant needs to be present to argue his or her case and counter any new arguments from the life office. However, with the threat of high legal costs sitting over the heads of the complainants, most cannot afford to put their case forward. The PFA recently attempted to oppose the application in the case of Holloway and Old Mutual, but the judge dismissed his bid to defend his ruling on the narrow issue of whether he has the power to investigate matters involving underwritten retirement annuity funds. Without the complainant there to promote their interests or the ability of the PFA to argue its case, the life office faces virtually no contest.
The question, then, is why have a PFA at all? After months of work, research and legal prowess that goes into making a final ruling on behalf of the complainant, the defendant, invariably a life company, is able to bring an application to the high court to overrule the decision virtually unopposed. According to Ngalwana, life companies threaten that if complainants should oppose the application, they will be made to pay the legal costs of the company. “This is not entirely accurate, it is only true if the applicant succeeds.”
Although this has always been the situation, what has finally brought matters to a head was the decision by the courts last week not to allow the PFA to defend one of his rulings against Old Mutual. Initially Old Mutual had invited the PFA to oppose its application. When the crunch came, Old Mutual argued that the PFA had no place in the court and the court appears to have agreed and will give reasons for its decisions later.
Ngalwana has made recommendations to the Financial Services Board and treasury as to the changes needed in order to give the consumer watchdog more legal teeth. Ngalwana proposes that the wording of section 30P be changed so that anyone who is aggrieved can bring an appeal to a full Bench at the high court.
An appeal does not allow fresh argument and therefore the complainant is not prejudiced by not being present. This may be done only if the adjudicator’s office were to form part of the court hierarchy. Another alternative is to remove section 30P altogether, in which case the matter can be brought to the courts on review to see whether the PFA applied its mind properly to the facts. This was the mechanism used in challenging decisions of the Truth and Reconciliation Amnesty Committee.
“In the current climate I cannot do my job effectively. Each ruling will be set aside so it makes no difference what we do, it is fruitless,” says Ngalwana, who cites both the legislation and budget constraints as reasons he will not be renewing his contract. Financial constraints have been increasing because of the high profile of the office, with complaints increasing from 200 a month to more than 450. Yet the office continues to function with the same amount of staff. “In the [United Kingdom] my counterparts process half the amount of complaints per annum, yet they have a staff compliment of 35.” This is seven more than Ngalwana’s office.
Ngalwana says that when he accepted the three-year contract he had hoped to fulfil his objectives within that time frame, which were to increase transparency and bring reform to the pension fund industry. “I came to make the retirement industry a more transparent industry. I believed that if I was having difficulty with the products then less informed people must have an even more difficult time due to the opaque nature of the products.”
However, Ngalwana believes there is still a long way to go before his objectives are met and the Act does not allow for an equitable resolution. So, in the circumstances he will be returning to private practice as a barrister in Johannesburg.
On Wednesday the Financial Services Board issued a statement saying it is news to it that the adjudicator will step down at the end of his contract. Ngalwana, however, says he communicated this in a letter on September 28.