Key Takeaways
- • The High Court in Johannesburg set aside two Financial Sector Conduct Authority (FSCA) decisions on December 10, 2025, ruling the regulator acted unlawfully against the Municipal Employees Pension Fund (MEPF) ahead of its 11 December general meeting.
- • The Court affirmed that the FSCA has statutory power under sections 131 and 132 of the Financial Sector Regulation Act to request election-related records and conduct on-site inspections at pension fund general meetings, provided statutory thresholds are met.
- • The MEPF, which manages about R28 billion for roughly 100,000 members, was successful in both its opposition and counterapplication, and the FSCA was ordered to pay costs including those of two counsel.
- • The Court found the FSCA failed to show unredacted municipal election returns were "reasonably necessary" and that its inspection notice rested on irrelevant, unsubstantiated, or undisclosed grounds, including matters from 2021.
- • The ruling does not bar future use of sections 131 and 132, but precludes the FSCA from reviving the impugned decisions for the December meeting, which the Court described as a spent event.
Summary
The High Court has affirmed the broad supervisory powers of the Financial Sector Conduct Authority while ruling that the regulator acted unlawfully in exercising those powers against the Municipal Employees Pension Fund (MEPF) ahead of the Fund's general meeting on 11 December. In a judgment handed down on 10 December, the Court reviewed and set aside two FSCA decisions, finding the Authority had not met the statutory thresholds required to compel unredacted election records or conduct an on-site inspection of the meeting. The MEPF serves about 100,000 active and retired members and manages assets valued at roughly R28 billion, according to the article.
The dispute arose after the FSCA launched an urgent application to enforce supervisory measures invoked under sections 131 and 132 of the Financial Sector Regulation Act. The MEPF, its principal officer, and its administrator, Akani Retirement Fund Administrators, opposed the application and filed a counterapplication seeking to have both decisions declared unlawful. The High Court in Johannesburg heard both matters together on 5 December. According to the judgment, the FSCA and the MEPF had been in "protracted engagement" throughout 2025, including a September exemption under section 13 of the Pension Funds Act and an October enforceable undertaking covering preparatory steps such as timely submission of municipal election returns. Between late October and mid-November, the FSCA issued two statutory notices: one requiring unredacted municipal returns under section 131, and one authorising a supervisory inspection at the general meeting under section 132.
The Court confirmed that the FSCA may request election-related information and inspect pension fund general meetings where the conditions of the FSRA are met. Acting Judge Don Mahon said section 131 "is capable of extending to election-related documentation where such information is reasonably necessary for supervisory purposes," and that section 132 "may in principle authorise an on-site inspection at any venue at which a pension fund conducts its business, including a general meeting convened for the election of trustees." However, the Court held the FSCA had not shown that unredacted returns were reasonably necessary, noting the MEPF had already supplied redacted versions indicating delegate numbers and compliance, and that the regulator had not explained why less intrusive means were inadequate or engaged with privacy concerns raised by municipalities.
On the inspection notice, the Court found the FSCA had not disclosed all grounds relied upon, and that several grounds were irrelevant or unsubstantiated. Some grounds related to 2021 events that the Court noted had been overtaken by prior Financial Services Tribunal outcomes. Mahon AJ said the cumulative effect was a decision with "no rational connection to the statutory purpose," that was procedurally unfair and therefore unlawful. The Court also observed that the FSCA had engaged with the Fund for months but issued the inspection notice only in mid-November without explanation, a delay it found disadvantaged the Fund.
The Court ordered the FSCA to pay the respondents' costs, including the costs of two counsel. Mahon AJ stated the ruling does not restrict future use of sections 131 or 132 where a proper factual and statutory foundation exists, but precludes reliance on supplemented reasoning to revive the impugned decisions for the December meeting. In a statement, the MEPF called the outcome a "landmark ruling" that "vindicated" the Fund, described the FSCA's intervention as "overbearing," and said the redactions were necessary "to maintain electoral integrity." The Fund added that the FSCA must meet jurisdictional requirements that the information sought is reasonably necessary for the statutory purpose identified.
The dispute arose after the FSCA launched an urgent application to enforce supervisory measures invoked under sections 131 and 132 of the Financial Sector Regulation Act. The MEPF, its principal officer, and its administrator, Akani Retirement Fund Administrators, opposed the application and filed a counterapplication seeking to have both decisions declared unlawful. The High Court in Johannesburg heard both matters together on 5 December. According to the judgment, the FSCA and the MEPF had been in "protracted engagement" throughout 2025, including a September exemption under section 13 of the Pension Funds Act and an October enforceable undertaking covering preparatory steps such as timely submission of municipal election returns. Between late October and mid-November, the FSCA issued two statutory notices: one requiring unredacted municipal returns under section 131, and one authorising a supervisory inspection at the general meeting under section 132.
The Court confirmed that the FSCA may request election-related information and inspect pension fund general meetings where the conditions of the FSRA are met. Acting Judge Don Mahon said section 131 "is capable of extending to election-related documentation where such information is reasonably necessary for supervisory purposes," and that section 132 "may in principle authorise an on-site inspection at any venue at which a pension fund conducts its business, including a general meeting convened for the election of trustees." However, the Court held the FSCA had not shown that unredacted returns were reasonably necessary, noting the MEPF had already supplied redacted versions indicating delegate numbers and compliance, and that the regulator had not explained why less intrusive means were inadequate or engaged with privacy concerns raised by municipalities.
On the inspection notice, the Court found the FSCA had not disclosed all grounds relied upon, and that several grounds were irrelevant or unsubstantiated. Some grounds related to 2021 events that the Court noted had been overtaken by prior Financial Services Tribunal outcomes. Mahon AJ said the cumulative effect was a decision with "no rational connection to the statutory purpose," that was procedurally unfair and therefore unlawful. The Court also observed that the FSCA had engaged with the Fund for months but issued the inspection notice only in mid-November without explanation, a delay it found disadvantaged the Fund.
The Court ordered the FSCA to pay the respondents' costs, including the costs of two counsel. Mahon AJ stated the ruling does not restrict future use of sections 131 or 132 where a proper factual and statutory foundation exists, but precludes reliance on supplemented reasoning to revive the impugned decisions for the December meeting. In a statement, the MEPF called the outcome a "landmark ruling" that "vindicated" the Fund, described the FSCA's intervention as "overbearing," and said the redactions were necessary "to maintain electoral integrity." The Fund added that the FSCA must meet jurisdictional requirements that the information sought is reasonably necessary for the statutory purpose identified.
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