The Financial Sector Conduct Authority (FSCA) has published Conduct Standard 2 of 2025 (the 2025 Standard), setting out reformed conditions for pension fund benefit administrators under section 13B(1) of the Pension Funds Act, 1956. The 2025 Standard is supported by the FSCA's Statement of Need and Impact and marks a significant regulatory milestone, formally replacing the outdated Board Notice 24 of 2002 (BN24 of 2002).

BN24 of 2002 has not kept pace with broader regulatory developments. Since its publication, the regulatory landscape has evolved significantly, including the launch of the Treating Customers Fairly (TCF) initiative, the 2014 Retail Distribution Review, and the implementation of the Twin Peaks model in 2018. Yet BN24 of 2002 reflects none of these developments, failing to capture TFC outcomes or address fundamental conduct areas that the 2025 Standard now covers. Its lack of alignment with modern regulatory expectations has made reform imperative.

The FSCA undertook comprehensive stakeholder engagements to refine the regulatory requirements. During the public consultation period, which ran from 29 July to 13 September 2021, the FSCA received over 350 comments from 12 commentators. Key issues raised included, inter alia, requests for terminology clarification, concerns around duplication for dual-licensed entities, and questions regarding capital adequacy thresholds These inputs were carefully considered and are reflected in the final 2025 Standard.

Key features of the 2025 Standard

The 2025 Standard introduces wide-ranging business principles that were absent from the 2002 framework. Benefit administrators are now required to demonstrate strong governance aligned with TCF outcomes, supported by clearly documented policies and defined oversight responsibilities. 

The 2025 Standard sets out detailed fit and proper requirements, including disqualifying criteria and competency thresholds. It also prescribes robust outsourcing conditions, and mandates more comprehensive administration and service level agreements.  Formal complaints handling frameworks must be in place, conflict‑of‑interest policies must be enforced, and clear communication protocols with funds and members must be maintained.

Further obligations include data governance measures, minimum record retention periods, audit and accounting standards, and the operational capacity to manage member data accurately and securely. Ultimately, the 2025 Standard is designed to bridge these requirements are intended to close historical regulatory gaps that have led to administrative failings and member prejudice.

Transitional timeline

While much remains to evolve, the FSCA has acknowledged the cost implications and, accordingly, removed some of the more onerous requirements. These include relaxation of auditing obligations and the removal of both the assurance requirement and the ZAR 3-million capital adequacy threshold. 

Upon publication, the 2025 Standard will replace BN24 of 2002 with immediate effect. However, implementation will follow a staggered approach, with certain provisions becoming effective immediately and others phased in over a 6-to-12-month transition period.

The shift from BN24 of 2002 to the 2025 Standard reflects a fundamental transition from a compliance-focused to a conduct-focused regulatory framework, one that prioritises customer outcomes and governance excellence, while reinforcing operational integrity across South Africa's pension fund administration sector.

Written by Nicolette van Vuuren, partner and Megan Wilkinson, candidate attorney at Webber Wentzel