By now, most in the industry would have heard that yet another managing agent has been recently forcibly closed due to alleged fraudulent activities and mismanagement, leaving their clients, they being schemes, high and dry.
Tragically, it also seems that those against whom this alleged fraud was perpetrated were incorrectly advised against taking out the legally required insurance cover, as directed by Regulation 15 of the Community Schemes Ombud Service Act, which would have insured the Schemes against exactly this type of situation.
Most schemes would hold no hopes for the PPRA Fidelity Fund to come to the rescue, certainly not in the short term anyway, leaving these schemes severely cash strapped.
While this situation is but one in a thousand, this shocking incident has broader ramifications on the industry, where trust is paramount; the vast majority of managing agents and their staff are honest, hardworking professionals trying their best to manage their clients and members with skill and diligence which is rarely acknowledged and appreciated by those very same clients and members.
Industry players will be forced to once again step up, to defend the integrity of our industry and all must exercise a degree of introspection to identify and eliminate any unbecoming conduct, this for our collective sakes and to rebuild the trust that has now be shaken, this while again highlighting the importance of only dealing with reputable service providers.
ZDFin recently wrote an article on exactly this topic which we urge all scheme executives to re-read: