FSB fines firms breaching rules


The Financial Services Board (FSB) Enforcement Committee has handed down some stiff penalties on a number of financial services companies for not sticking to the law in how they handle your investments.

Recent actions include:

* Lombard Life was fined R100 000 and financial services company Financial Management International R75 000 for taking deposits from investors in an assurance product, Vision, in contravention of the Banks Act. In setting the fine the committee took into account that the contraventions were as a result of a bona fide misinterpretation of the applicable law. Both parties accepted responsibility for the contravention, co-operated with the registrar’s investigation and enforcement action and “expressed sincere regret” for the contravention.

* Capital Alliance Life was fined R100 000 for contravening the Financial Advisory and Intermediary Services Act in that it conducted financial services related business with Eagle Watch Financial Services, which was not an authorised financial services provider.

* Absa Investment Management Services was fined R100 000 for failing to maintain liquid assets equal to or greater than 13/52 weeks of its annual expenditure.

* Absa Asset Management was fined R10 000 after it changed an investment mandate it held from an institutional investor after the initial mandate had been approved by the FSB but before the mandate was enacted. The initial mandate allowed for only an annual asset management fee, but a performance fee was added, with the agreement of the institutional client, to a new version of the mandate that was not approved by the FSB. The FSB says the change has now been approved and that neither the institutional client nor its clients suffered any damage.

The FSB Enforcement Committee is an administrative justice body that may impose administrative penalties, compensation orders and cost orders on respondents that are found to have contravened any law administered by the FSB.


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