Parliamentary Portfolio Committee on Finance June 2006 Parliamentary

Parliamentary Portfolio Committee on Finance – June 2006

Parliamentary Portfolio Committee on Finance – June 2006 Alexander Forbes is determined to be the industry leader on disclosure and transparency in dealings with clients

Historical bulking practice § The historical practice of receiving income from bulking dates back approximately 10 years and lasted until we voluntarily terminated it in September 2004 § We continue to bulk in order to secure better interest rates on current accounts for the full benefit of our retirement fund clients § We acknowledge that historically we did not meet the required standards of disclosure; we have apologised for this § We have co-operated fully with the FSB investigation into bulking and have submitted a detailed written report to the FSB § With the agreement of the FSB, we will make a settlement offer to our clients; the aggregate cost is R 380 million

Comprehensive business practice review § A Board sub-committee was appointed comprising four non-executive directors: – Chairpersons of the Group and Africa Boards – Chairpersons of the Group and Africa Audit Committees § Deneys Reitz and Ernst & Young have been commissioned to review and report on the business practices throughout the South African group § The purpose of the independent review is to ensure that all business practices meet the highest level of integrity

Comprehensive business practice review (continued) § The review encompasses: – All of the income streams of the South African group – Any and all matters reported to the company, both from internal and external sources § The preliminary findings of the review indicate a limited number of additional historical items where we either did not make adequate disclosure or where it is uncertain based on the historical records as to whether adequate disclosure was made § The planned completion date of the review is 31 July 2006; the report will be submitted to the FSB for scrutiny

Alexander Forbes is determined to be the industry leader on disclosure and transparency in dealings with clients: – We embrace the positive changes in the financial services industry – We will continue to co-operate fully with the FSB and other industry bodies – We have a pool of talented people committed to: – continuing to add value to our clients – setting the industry benchmark

Thank you