The Financial Sector Conduct Authority (FSCA) has imposed R100.6m in administrative penalties as part of its actions to ensure compliance with SA’s financial regulatory framework during its 2022/23 financial year.
The regulator imposed a total of R153.86m in administrative penalties on 44 investigated parties between April 1 2022 and March 31 2023, according to its regulatory actions report for that period, which was released on Tuesday. However, after taking into account those penalties that were suspended or set aside after reconsideration by the Financial Services Tribunal (FST), the total administrative penalties payable dropped to R100.64m.
“The FSCA strives to be fair, objective and consistent in its enforcement actions,” the regulator said in its report. “A component of fairness is to ensure that all person’s rights are protected during the investigation and enforcement process.”
Among the administrative penalties set aside was the R50m imposed on Viceroy Research. The offshore short-seller and activist group published a report on Capitec in January 2018, which the regulator deemed to be false, misleading and deceptive. Viceroy’s report, titled “Capitec — A wolf in sheep’s clothing”, accused the bank of being a predatory lender and recommended that it immediately be placed under curatorship. About R24bn of Capitec’s market capitalisation was being wiped out in the wake o the report, though the share price later recovered.
The FSCA says it has now launched an application to the High Court to review and set aside the FST’s November 15 ruling that its R50m fine be set aside on jurisdictional grounds. While the FST found the FSCA had jurisdiction over Viceroy’s, conduct that did not extend to the person of the Viceroy partners, since they didn’t reside in SA.
“By extension, that means the regulator did not have jurisdiction to impose a penalty given that the three authors were foreign nationals and not based in SA,” the FSCA said in its regulatory actions report.
The FSCA’s application is still in progress.
The FSCA said most of the administrative penalties imposed relate to noncompliance with the Financial Advisory and Intermediary Services (FAIS) Act. The regulator also suspended the licences of 984 financial services providers (FSPs), withdrew 420 licences and debarred 210 persons from providing financial services.
The majority of the suspensions and licence withdrawals were due to the non-submission of statutory returns or nonpayment of levies. The majority of debarments involved what the FSCA described as “dishonest conduct”. The number of suspensions constitute approximately 8% of the total number of FSP licences and the number of withdrawn licences constitutes about 4% of the total number of FSP licences.
The FSCA has a range of investigative powers, that include conducting interviews under oath, the issuing of subpoenas for documents, and the execution of search and seizure warrants. During the reporting period the FSCA opened 481 investigations, which mostly relate to unauthorised FAIS and insurance business, of which 406 were finalised. It still has 329 ongoing cases that have required it to boost the capacity of its enforcement division.
To warn the public of possible unauthorised or illegal activities, the FSCA published 47 public warnings, the bulk of which related to the rendering of unauthorised financial services. Interventions taken by the FSCA relating to curatorships, statutory management, enforceable undertakings and removal of persons from positions mostly occurred in the retirement funds industry.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.