Representatives from the Road Accident Fund (RAF) told Parliament’s Portfolio Committee on Transport that plans are underway amend the RAF Act. The amendments are aimed at improving the entity’s operations.
The RAF delegation briefed the Committee on Tuesday, 12 March to discuss the progress in implementing the entity’s turnaround strategy, including its plans to amend legislation governing the scheme.
Members of the RAF board, Chief Executive Officer, Mr Collins Letsoalo, the Deputy Minister of Transport, Mr Lisa Mangcu, and Mr Chris Hlabisa, deputy director general of the department.
The Board Chairperson, Ms Lorraine Francois, told the committee that when they came in as a new board, they assessed the environment at RAF and identified many issues relating to financial sustainability and legislation that does not support the fund’s mandate.
She said the fund was now self-sustaining with little support from the fiscus and the board and management were also committed to driving transformation in the organisation.
‘No longer in ICU’
“RAF is no longer in ICU, not being mismanaged, and all we need to do is support it and ensure it remains sustainable. The first thing is to adopt amendments to the legislation,” said Ms Francois.
During the term of the 6th Parliament, the committee decided not to proceed with the Road Accident Benefit Scheme (RABS) Bill but rather to amend the Road Accident Fund Act.
The RABS Bill aimed to replace the Road Accident Fund Act and to improve the administration of benefits and payouts to accident victims.
On Tuesday, the leadership of RAF told the committee that plans were underway to table amendments to the RAF Act.
RAF CEO, Mr Collins Letsoalo said the amendments will simplify the fund’s system. He said people are struggling to navigate through the system.
To address the accessibility challenges in RAF services and information, RAF launched a contact centre. This provides a platform for RAF claimants to access their claims information without relying solely on their legal representatives. One of the key programmes implemented through the contact centre is the “know your rights campaign”, which allows claimants to verify the payments made by RAF to their legal representatives.
Signs of improvement
The Auditor-general (AGSA) in the RAF 2022/23 Audit and Management Reports acknowledged the RAF for not only its strategic focus on the settlement of claims within 120 days, but also for achieving this target for the first time. Although the RAF is still a long way from settlement of all claims within 120 days, the overall turnaround time has shown good signs of improvement.
The RAF has recorded commendable achievements since implementing its 2020/25 Strategy. The AGSA also noted improvements in procurement, asset management, information technology and performance information and there was a significant improvement in the RAF’s organisational performance from 57% in the 2019/20 financial year to 91.3% in the 2022/23 financial year.
Reviewing operations
In addition to system challenges the legislative changes must address, the RAF also told the committee that the current scheme was highly inequitable as it benefited more claimants with a good economic background.
The fund also wants to review foreign claims as these claims are prone to fraud because of the difficulty of establishing proof of life and assessing the seriousness of injuries.
Mr Letsoalo said the most expensive claim the RAF had paid was to a Swiss national in 2010 for R500 million. The Fund paid R1.62 billion for foreign claims during the 2022/23 financial year.
The RAF is also proposing direct claims, without the involvement of lawyers, and says this will simplify the claims process and enable claimants to lodge claims without the help of third parties.
In its presentation to the committee, the RAF also noted their ongoing dispute with the Auditor-General on whether the RAF is an insurer or a social benefit fund and the application or use of the relevant accounting standards.
According to the CEO, the AGSA argues that the RAF is an insurer that must apply IFRS 4, a standard meant for insurance contracts. This standard has been discontinued since 1 January 2023 and replaced with IFRS 17.
The RAF maintains that it is a social benefit fund as classified in the 2017 Institutional Sector Classification Guide published by the South African Reserve Bank. It says this position was confirmed in December 2022 by the Public Sector Classifications Committee. The RAF is also classified by the NDP 2030 as part of the social wage as a Social Security Fund.
The RAF also told the committee that Generally Recognised Accounting Practice Standards in South Africa do not have a standard for social benefits. The only existing global standard for social benefits is the International Public Sector Accounting Standards Boards’ (IPSASB’s) IPSAS 42.
Committee Chairperson Ms Mina Lesoma said the committee had taken note of the report and will flag the RAF Amendment Bill for the Seventh Parliament to prioritise.
By Sakhile Mokoena
12 March 2024
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