The Financial Sector Conduct Authority (FSCA), previously Financial Services Board (FSB), has the responsibility to supervise the compliance of financial institutions with financial sector laws. Where the FSCA finds that a financial institution is not compliant, it may take appropriate remedial and enforcement action. These actions could result in referral to the Enforcement Committee of the FSCA which can impose administrative penalties. Alternatively, it could apply to Court to place a financial institution under curatorship.
Overview of enforcement actions imposed during 2017
During 2017 the FSCA took action in 17 cases where it imposed administrative penalties. The total Rand value of enforcement actions for 2017 amount to R4.7 million. These enforcement actions ranged from the lowest penalty imposed being R10 000 to the highest penalty imposed being R 2 million together with the costs of the enquiry.
The most frequently contravened legislation for this period was the FAIS Act, the Financial Markets Act, the Policyholder Protection Rules (both Long Term and Short Term), CISCA, and the Securities Services Act. The percentage of enforcement actions per legislation contravened may be further detailed as set out below:
The above statistics are a harsh reality of what non-compliance could lead to. It is therefore imperative that financial institutions remain compliant in addition to displaying a willingness to comply. In the event of an enforcement action being ordered, persons aggrieved by decisions may apply to the Financial Services Tribunal established in terms of Section 219 of the Financial Sector Regulation Act 9 of 2017 (FSRA) for a decision to be reconsidered. However, we believe that prevention is key, as a reconsideration may not always work in your favour.
Should you require assistance with any compliance related matter, contact your regional Masthead office or email email@example.com.