FINANCIAL EDUCATION: Editorials: Edition: July / September 2019

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Hard questions

Work through the high-mindedness to explain precisely the

promises and practicalities of the myriad courses on offer.

Trustee training has become a hot topic. First there’s the draft standard released by the Financial Sector Conduct Authority to prescribe the minimum skills for the board members of pension funds. Second there’s the anticipation by training providers of scorecard points under the Financial Sector Code.

The draft standard wants trustees at least to complete the FSCA’s trustee toolkit. They’ll gain certification merely for having completed it. Additionally, the draft wants trustees to undertake “further skills and training from credible providers as deemed necessary by (the fund’s) board”.

These “credible providers” would include the institutions committed to compliance with the FSC. Much money must be allocated for it and benefits are within the grasp of providers who satisfy the stipulated conditions (see elsewhere in the TT edition).

Prominent industry bodies, institutions and others have been at it for some time. During the Batseta winter conference, several were represented on a panel — Batseta itself, the ASISA Academy, Inseta and private company Six Capitals – to describe the “avenues” for retirement-fund fiduciaries to “sharpen their skills in this ever-changing industry”.

Their session was more explanatory than anything else. Description is well and good, as is the FSCA’s draft, but it opens for debate a variety of issues that beg interrogation because they run deeply and often controversially to the heart of fund governance.

It relies on trustees and aspirant trustees drawn to serve on boards. They might usefully ask:

• When the fund industry talks of “professionalisation”, for the courses being provided, what exactly is meant?

• Are different levels of professionalisation applied in training? If so, what would be the highest and lowest levels for acceptance to serve on boards?

• What advantages are there for the individual in moving from the lowest to the highest?

• Any indications of the time and effort required to attain professionalisation at the different levels? Can this reasonably be expected of people in fulltime employment?

• Is there some minimum educational requirement to embark on a course for professional qualification? What of say a shop steward who doesn’t have matric but is keen to become a trustee?

• Can members of a fund elect as a trustee a person who has no professional qualification? If so, is it a good or bad thing?

• Can’t one rely on the sponsors of umbrella funds to ensure that the trustees appointed are competent, for instance to appoint an experienced actuary who has no “professional” qualification as designated in terms of the training being offered for CPD (continuous professional development) points?

• Why should an aspirant or incumbent trustee embark on training at all? Would he or she expect higher remuneration the higher the professional qualification or otherwise be rewarded for training courses completed?

• How would the trustee and trainer know where to start e.g. with basic economics and fund administration or with drafting an IPS (investment policy statement), appointing asset managers (amongst others in the services chain) and engaging with investee companies on ESG (environmental, social and governance) matters?

• Is the FSCA draft conduct standard (published in May) likely to serve its intended purpose if people who use the toolkit be certified as having used it but not be marked for having passed it? Will use of the course qualify a person to become a trustee?

• Is this FSCA toolkit a necessary starting point or can it simply be overlooked by trustees who prefer other means of being trained e.g. by Inseta or private-sector courses?

• Who appraises the performance of trustees and who can dismiss them for poor performance? What are the carrots and sticks respectively to ensure that trustees properly serve fund members?

Answers are invited.