The regulator for the financial services sector imposed about R943m in administrative penalties during the 2023/24 financial year.
The fines were imposed on 31 individuals and represented a significant increase on the R100m imposed on 44 individuals in the previous year.
Of the total administrative penalty, R475m was issued against the late former CEO of Steinhoff, Markus Jooste — the largest ever imposed on a single individual — for among, other things, publishing misleading financials.
The increase in penalties was as a result of the strengthening of the Financial Services Conduct Authority’s (FSCA) oversight mechanisms to detect and address misconduct promptly, commissioner Unathi Kamlana said in the authority’s annual report.
The FSCA regulates the market conduct of banks, insurers, retirement funds, financial service providers, collective investment schemes, credit ratings agencies, co-operative financial institutions, central securities depositors, administrators and market infrastructure.
A total of 483 new investigation cases were registered during the year and 418 finalised. The licences of 1,061 financial service providers were suspended, 75 licences were withdrawn and 156 individuals were debarred.
The majority of the suspensions and withdrawals related to non-submission of statutory returns and/or nonpayment of levies, while most of the debarments involved dishonest conduct. Most of the administrative penalties imposed related to noncompliance with the Financial Advisory and Intermediary Services Act.
“These decisive enforcement actions demonstrate that we stand ready to take deterrence actions to protect the integrity of the financial sector in line with our strategic objective of acting decisively and visibly against misconduct,” Kamlana said.
The FSCA participated in the effort by a number of stakeholders led by the National Treasury to get SA removed from the Financial Action Task Force greylist which was imposed because SA did not meet global standards to combat money-laundering and terrorism financing.
“Our focus has been on addressing the specific action items applicable to us, including strengthening our anti-money laundering and counter-terrorist financing (AML/CFT) supervisory capacity by appointing nine additional staff members and planning further expansion in the period ahead.
“This enhanced capacity has enabled more in-depth and frequent inspections, and we have issued several administrative sanctions related to AML/CFT breaches, demonstrating our commitment to strengthening the integrity of the financial system and working towards removing SA from the greylist,” he said.
A total of 668 licences were authorised for providers of financial products, services and market infrastructure.
The FSCA is financed by levies imposed on the industry with the financial advisory and intermediary services (FAIS), pensions, banks and insurance industries continuing to be the major contributors to levy income, accounting for 31%, 21%, 11% and 18% respectively with the remaining 19% contributed by other sectors.
Its revenue consists of fees, levies and penalties. For the year ended March 31 2024, revenue grew by 6% to R1.096bn (2022/23: R1.038bn) against a budget of R977m. A total of R1bn was paid by the industry, compared to R964m the previous year.
At the March year-end the FSCA had a surplus of R159m (2022/23: R9.5m deficit). This was primarily due to an increase in levies including the first year of the special levy as per the Levies Act and savings.
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