The Financial Sector Conduct Authority (FSCA) issued fines for various contraventions of financial laws last year to the value of almost R200 million, with an increase of 59% in new cases between 1 April last year and 31 March this year.
According to the FSCA Regulatory Actions Report, the authority debarred 131 people, issued 107 public warnings, referred 14 enforceable undertakings to the police, finalised 633 investigations, suspended 24 licences, withdrew 382 licences and issued 13 directives.
This was the third edition of the report, which aims to advance the FSCA’s strategic objective of upholding confidence and integrity in the financial sector by increasing the visibility of enforcement activities, deterring misconduct, and raising awareness of regulatory requirements.
The report also reflects the FSCA’s ongoing efforts to embed the principles of Treating Customers Fairly across the sector and to take firm action against misconduct. These efforts are essential to building and maintaining trust in financial institutions and markets.
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FSCA protects integrity of financial institutions
Gerhard Van Deventer, divisional executive for enforcement at the FSCA, says to support these objectives, the FSCA implemented mechanisms aligned with the Protected Disclosures Act and ensuring confidentiality and anonymity where required, including a dedicated whistle-blower hotline, a protected disclosure protocol and flexible reporting channels to facilitate the submission of information to enforcement teams.
Van Deventer says financial customers must be able to rely on the integrity of licensed institutions, and the FSCA acts decisively where conduct poses material risks, as reflected in the number of debarments and licence withdrawals.
Cases involving unregistered insurance business increased by more than 134%, with most linked to the funeral parlour sector, Van Deventer says.
The report details a range of enforcement actions, including the imposition of 51 administrative penalties amounting to R119 829 523. R82 443 540 was imposed for contraventions of the Financial Advisory and Intermediary Services Act, while a total of R68 million was imposed on the investigated parties in the N-e-FG matter, where funds were invested without the consent of clients.
Penalties of another R16 985 000 were imposed for contraventions of the Financial Intelligence Centre Act for failing to implement measures to stop money laundering and terrorist financing.
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FSCA’s key objective to protect financial customers
Van Deventer says the FSCA’s key objective is the protection of financial customers, and therefore, 131 individuals were debarred, mostly for dishonest conduct and false policies. “This marks a decline from the previous period, likely due to targeted interventions and greater public visibility.”
Suspensions and withdrawals of licences were done to protect financial customers. Van Deventer says the FSCA can suspend a license where the non-compliance can be remedied, and the number of suspended licences decreased significantly, while licence withdrawals, on the other hand, increased markedly.
“This shift is primarily due to the process cycle for suspensions and withdrawals related to the non-submission of statutory returns. Over 90% of licence withdrawals were due to non-submission of returns, while the rest were linked to serious misconduct.”
Van Deventer says contraventions of the Financial Sector Regulation Act, including impersonation of FSCA personnel and unlawful association, are part of a growing global trend in online harm.
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FSCA identified these risk areas with heightened risk
He points out that the report underscores several heightened risk areas that will inform the FSCA’s enforcement priorities in the year ahead:
- Online harm, including social media scams, signal providers and finfluencers.
- Misuse of financial licences to front unauthorised operations.
- Regulatory examination fraud.
- Misleading advertising and inappropriate product claims.
- Non-compliance with AML/CFT risk and control frameworks.
Since crypto has been recognised as a financial product, a dedicated investigation team has been investigating unlicensed crypto traders. By 12 May this year, the FSCA received 453 licence applications, with 264 approved, 109 voluntarily withdrawn, and 11 declined.
The FSCA launched 36 crypto investigations and closed 21, while 15 are ongoing.
