The Retirement Benefits (Treating Fairly) Guidelines

Legal Notice 151 of 2019

This is the latest version of this Legal Notice.
Citation
Legal Notice 151 of 2019
Primary work
Retirement Benefits Act
Date
Language
English
Type
Legal Notice
Publication
Download PDF (77.5 KB)
Related documents
LAWS OF KENYA

RETIREMENT BENEFITS ACT

THE RETIREMENT BENEFITS (TREATING FAIRLY) GUIDELINES

LEGAL NOTICE 151 OF 2019

  • Published in Kenya Gazette Vol. CXXI—No. 126 on 27 September 2019
  • Commenced on 27 September 2019
  1. [Revised by 24th Annual Supplement (Legal Notice 221 of 2023) on 31 December 2022]

Part I – PRELIMINARY

1. Citation

These guidelines may be cited as the Retirement Benefits (Treating Customers Fairly) Guidelines.

2. Interpretation

In these guidelines, unless the context otherwise requires—"Act" means the Retirement Benefits Act (Cap. 197);"administrator" means a person appointed under a written instrument by the trustees of a scheme to manage the administrative affairs of the scheme;"approved issuer" means an insurer registered under the Insurance Act (Cap. 487) or any other issuer approved in writing under the Capital Markets Act (Cap. 485A) or any other written law;"Authority" means the Retirement Benefits Authority established under section 3 of the Act;"beneficiary" means a person, other than a member, who is receiving or is entitled to receive a benefit under a scheme;"board" means a board of directors of a service provider;"custodian" means a company whose business includes taking responsibility for the safe custody of the funds, securities, financial instruments and documents of title of the assets of scheme funds;"customer" means a member, beneficiary or trustee of a scheme;"manager" means a company registered by the Authority whose business includes investment and management of funds or other assets of a scheme;"member" means a person contributing to a scheme and includes a person entitled to or receiving a benefit under the scheme;"retirement benefits scheme" means any scheme or arrangement (other than a contract for life assurance) whether established by a written law for the time being in force or by any other instrument, under which persons are entitled to benefits in the form of payments, determined by age, length of service, amount of earnings or otherwise and payable primarily upon retirement, or upon death, termination of service, or upon the occurrence of such other event as may be specified in such written law or other instrument;"regulations" means regulations made under the Act;"scheme" means a retirement benefits scheme;"senior management" means a person who has the authority to plan and control the business operations of a company and whose absence would materially affect the performance of the company;"service provider" means an administrator, fund manager, custodian, auditor or approved issuer of a scheme or any other person that the Authority brings under the requirements of these guidelines;"service-level agreement" or "SLA" means an agreement between trustees and service providers which sets out the terms of appointment and services to be rendered to the scheme by the service provider;"sponsor" means a person who establishes a scheme and also refers to a founder of a scheme; and"trustee" means means a trustee of a scheme fund and includes a trust corporation.

3. Application

These guidelines shall apply to all service providers appointed by trustees.

4. Responsibility

(1)Trustees shall be responsible for the overall implementation of these guidelines.
(2)Generally, trustees shall appoint service providers that agree to abide by the principles of these guidelines.
(3)Trustees shall ensure that service-level agreements are entered into with service providers and provide for properly recorded processes, reporting mechanisms and systems, and controls used to monitor the implementation of the agreements.

5. Objectives of the guidelines

The objectives of these guidelines shall be to ensure that—
(a)customers are treated fairly by the service providers;
(b)service providers focus on the customers’ needs and offer the best product or service solutions to the customers;
(c)retirement benefits products or services account for customer needs;
(d)customers are provided with clear, accurate and documented information;
(e)service providers keep customers appropriately informed before, during and after the adoption of products and services;
(f)service providers give customers advice that is suitable and responsive to customers’ needs;
(g)service providers offer services to customers that are of an acceptable standard and delivered in a timely manner;
(h)customers are not presented with unreasonable rules, conditions or costs after they take up products or services, or when they intend to change products or services, switch service providers, submit claims, or lodge formal complaints unless the rules, conditions or costs are disclosed at the time of taking up the product; and
(i)service providers fully disclose to customers the merits and demerits of the product or service at the point of sale.

Part II – RIGHTS AND OBLIGATIONS OF MEMBERS

6. Rights and obligations of members

(1)A member shall be the primary and ultimate customer of a service provider and shall have the right to be treated fairly when dealing with trustees and any service providers appointed by the trustees.
(2)A member has the rights and obligations set out in this Part so that the principles of these guidelines may be easily applied when offering the member products or services.
(3)A member shall have the right to receive the following information from trustees—
(a)a summary of the scheme’s trust deed and rules or the statutory instrument that established the scheme; particular emphasis should be placed in informing the member what the member’s role shall be especially with respect to nominees and beneficiaries;
(b)annual membership benefits statements;
(c)the annual report from the trustees presented at the Annual General Meeting of the scheme including any changes to the scheme benefits and contribution structure;
(d)a summary of the scheme’s audited financial statements;
(e)a summary of the scheme’s investments;
(f)a summary of the remuneration of trustees; and
(g)any other information that may be prescribed under the Act, regulations made thereunder or any other written law.
(4)A member has the right to inspect the following information held by the trustees—
(a)the scheme trust deed and rules or the statutory instrument that established the scheme;
(b)the scheme’s audited financial statements;
(c)the register with the details of the sponsor, members, trustees and service providers; and
(d)any other information that may be prescribed under the Act, regulations made thereunder or any other written law.
(5)The following are the additional rights of members—
(a)the immediate vesting of benefits;
(b)the right to opt for payment, transfer or deferment of benefits on exiting from a scheme as set out in the scheme rules;
(c)the right to transfer accrued benefits within sixty days of issuing a written notice to transfer or within such period that may be prescribed in the Act or regulation made thereunder;
(d)non-assignment or attachment of benefits for any purpose not prescribed under the Act or regulations made thereunder;
(e)commutation of benefits as prescribed in the scheme’s rules;
(f)one year’s notice to select an annuity or income drawdown provider, where applicable;
(g)nomination of beneficiaries;
(h)election of members representatives to the board of trustees unless a corporate trustee has been appointed as the sole trustee;
(i)the right to attend annual general meetings; and
(j)any other rights prescribed by the Act, regulations made thereunder or any other written law.
(6)A member has an obligation to—
(a)obtain and make every effort to understand the scheme’s documentation including the trust deed and rules or the statutory instrument that established the scheme;
(b)seek guidance from trustees or the administrator on any matter that is unclear or over which there is a dispute;
(c)make reasonable efforts to attend information briefing sessions where invited including annual general meetings and member education days;
(d)provide all necessary information as required under the scheme rules or the statutory instrument that established the scheme. Such information shall be accurate and timely to allow service providers carry out their functions effectively;
(e)conduct himself or herself with decorum and respect when dealing with trustees and service providers; and
(f)any other obligation prescribed by the Act, regulations made thereunder or any other written law.

7. Compliance with these guidelines

(1)Trustees and service providers shall be responsible for ensuring compliance with these guidelines.
(2)Trustees and service providers shall report annually to the Authority using the Treating Customers Fairly toolkit and toolkit notes set out in the Schedule hereto.
(3)The reports required under subparagraph (2) shall be submitted to the Authority within three months of the service providers’ year-end or anniversary of the service providers’ registration with the Authority.
(4)The "disclose, apply or explain" principle may be used where there is non-compliance and a trustee or service provider shall submit a non-compliance report stating the areas of non-compliance, the reasons for non-compliance and the proposed timelines (where applicable) within which compliance shall be attained.

8. Limitations

These guidelines shall be subject to the Act, regulations made thereunder and any other relevant written law and where there is a conflict between these guidelines and the provisions of the Act, regulations made thereunder or any other relevant written law, the Act, regulations or that other written law shall prevail.

Part III – PRINCIPLES OF TREATING CUSTOMERS FAIRLY

9. Organizational culture

(1)For the purposes of these guidelines, "organisational culture" refers to the underlying beliefs, assumptions, values and ways in which a service provider interacts with customers.
(2)Service providers shall treat customers fairly as part of their organisational culture.
(3)Service providers shall, in order to incorporate fair treatment of customers in their organisational culture, ensure that—
(a)the board and senior management have been sensitised on the requirements for the fair treatment of customers and the value of organisational culture change;
(b)the board oversees the implementation of an appropriate organisational culture that supports the fair treatment of customers;
(c)the board assigns to a specified senior manager the responsibility of ensuring that customers are treated fairly by the service provider;
(d)senior management conduct initial and annual reviews of the main business processes in order to identify areas that require improvement so as to ensure conformity with an organisational culture that supports the fair treatment of customers;
(e)senior management demonstrate to customers through practices and communication that the fair treatment of customers is essential to business operations;
(f)senior management train and maintain staff with knowledge, behaviour and values that align with these guidelines; and
(g)management information and reporting frameworks have been established to keep the board and senior management informed on the continuous implementation of an organisational culture that supports the fair treatment of customers.

10. Products and services

(1)Products and services offered by a scheme shall state the type of retirement benefits arrangement that is being offered, information on how to join the scheme, any ongoing information rights as prescribed by the Act, regulations made thereunder, and these guidelines, and the products and services offered to a member on exiting the scheme or retirement such as cash lump sums, pensions and annuities.
(2)Service providers shall ensure that products and services are designed to meet the needs of customers by—
(a)conducting adequate research and targeting when designing the product or service;
(b)establishing mechanisms to exhibit new innovations in products and services;
(c)appropriate and continual sensitisation of employees on product or service design and the customers that products or services are targeted at;
(d)appropriate promotion and distribution of products and services to customers;
(e)providing adequate information to customers to ensure that they understand the products and services being offered;
(f)disclosing and mitigating the risks arising from the adoption of products and services;
(g)providing disclaimers for products and services being offered by the scheme;
(h)collecting management information in order to track how products and services are targeted at customers; and
(i)establishing a process for the withdrawal of products or services that are unsuitable for the targeted customers.
(3)The Authority may require service providers to undertake effective and timely remedial action to address material deficiencies in service providers’ compliance with these guidelines.

11. Clear and appropriate information

(1)This paragraph sets out members’ right to certain kinds of information held by the service provider and required to be provided to its customers before, during and after the sale or delivery of a product or service to keep the customer appropriately informed at each stage of the transaction.
(2)Trustees shall ensure that members are provided with appropriate information about the products or services offered by service providers including charges, fees, termination conditions and risks associated with the products or services.
(3)To achieve the objectives of this paragraph, service providers shall—
(a)assess the clarity, suitable font size, appropriateness and fairness of information provided to customers;
(b)put mechanisms in place to ensure that customers are informed appropriately and in a timely manner about the products and services they may have subscribed to;
(c)disclose to customers any commissions or benefits received from the sale of products or services;
(d)put mechanisms in place to protect customers’ individual information and maintain the confidentiality of customers’ information;
(e)commission independent internal and external reviews of advertising materials and other customer communication used or published;
(f)publish clear product or service summaries and answers to questions frequently asked by customers;
(g)ensure that contract documents are drawn up and signed in time to ensure that customers’ rights are protected;
(h)establish feedback mechanisms to ensure that information received from customers about products or services is acted on appropriately; and
(i)clearly state the dispute resolution mechanisms available to customers.

12. Customer advice

(1)Trustees and service providers shall provide advice to sponsors and members to ensure that they get access to the best retirement arrangements and benefits under the scheme.
(2)Trustees and service providers shall ensure that the advice offered to customers is suitable and takes into account the specific circumstances under which the advice has been sought.
(3)To achieve the objectives of subparagraphs (1) and (2), service providers shall—
(a)establish mechanisms for obtaining information from customers that shall be appropriate for customers’ needs before giving customers any advice;
(b)establish processes for ensuring that clear and appropriate advice is given to customers;
(c)train their employees to continually give up-to-date advice to customers that is relevant to their needs;
(d)clearly specify where and whom advice is not expected to be given;
(e)establish feedback mechanisms about the advice given to customers;
(f)establish redress mechanisms to mitigate the effects of wrong or misleading advice given to customers; and
(g)trustees and service providers shall ensure that products and services meet the needs of identifiable customer groups such as persons with disabilities (PWDs), persons suffering from ill health, and other persons or classes of persons under the Act.

13. Performance and expectations

(1)Service providers shall ensure that products and services are offered at reasonable cost, conform to the given specifications and associated services are of acceptable standards and what the customer has been led to expect.
(2)Service providers shall, for the purposes of subparagraph (1) —
(a)employ monitoring tools and mechanisms to track customer satisfaction with products and services offered by the service providers;
(b)establish mechanisms that ensure the provision of up-to-date information to customers regarding products and services;
(c)analyse management information to determine reasons for termination of products or services by customers;
(d)institute awareness programmes on the merits or drawbacks of products or services offered by service providers; and
(e)establish clear service standards that shall be appropriately communicated to customers and display their key features.

14. Benefits payments and complaints management

(1)Trustees and service providers shall ensure that the benefits payments and complaints management processes are well communicated to customers, particularly to members.
(2)Trustees and service providers shall not impose on customers any undisclosed post-sale barriers in contravention of the provisions of the Consumer Protection Act (Cap. 501) and shall inform customers about the process of filing complaints with the Authority or Tribunal.
(3)For the purposes of this paragraph, service providers shall—
(a)establish and adhere to clear standards on benefits processing and complaints management;
(b)establish mechanisms for updating customers on changes to products or services;
(c)establish mechanisms to ensure that member and scheme records are maintained and updated;
(d)keep customers informed about the scheme and enable them to track the processing of benefits or complaints including any information about the person or team dealing with the processing of benefits or complaints;
(e)provide relevant information to customers on the benefits processing and complaints management processes;
(f)provide customers with adequate information and evidence in case benefits are not payable; and
(g)advise customers of other options for redress where customers are not satisfied with the handling of benefits processing or complaints management.

Part IV – ENFORCEMENT OF THESE GUIDELINES

15. Principles of enforcement

The following principles shall apply in the enforcement of these guidelines—(a)the Act, regulations made thereunder and these guidelines shall provide adequate guidance about the Authority’s expectation of minimum standards for treating customers fairly in the management of schemes;(b)the Authority shall perform comprehensive evaluations of service providers’ policies or strategies for treating customers fairly at regular intervals and assess the implementation of these guidelines; and(c)the Authority may require service providers to undertake effective and timely remedial action to address material deficiencies in their compliance with these guidelines.How to score:
1.Approved Issuers will insert their self-score in column (c); column (d) is constant and auto-generated; the variance in (e) will appear once the score in (c) is inserted.
2.Where a required indicator is partially completed, the Approved Issuer will score themselves 50% of the target score.
3.Approved Issuers may insert remarks on progress towards achieving the activity required
4.The Threshold refers to minimum score a well-managed Approved Issuer is expected to attain as it works with the Authority towards full compliance.
▲ To the top

History of this document

31 December 2022 this version
27 September 2019
Commenced
Read this version

Cited documents 2

Act 2
1. Insurance Act 247 citations
2. Capital Markets Act 59 citations

Documents citing this one 0