The Financial Services Board (FSB) Enforcement Committee, the board’s administrative justice arm, has fined two financial services companies R100 000 each for not adhering to the law.

* The first, Regent Life Assurance Company, was fined R100 000 for contravening the policyholder protection rules of the Long-Term Insurance Act, in that Regent:

- Entered into an agreement in connection with its insurance products with Gertel Algemene Handelaars CC trading as Multi Brokers, while Multi Brokers was not authorised to render financial services;

- Did not provide a policyholder with written information; and

- Conducted business with Multi Brokers without having entered into a written agreement.

The second, Ness Consulting Services, was fined R100 000 for contravening the Financial Advisory and Intermediary Services (FAIS) Act for conducting financial services business with another company, Prospercare Benefit Solutions, which was not licensed to render financial services in respect of funeral benefit policies.

And Prospercare Benefit Solutions was fined R80 000 for contravening:

- The FAIS Act by giving advice and rendering intermediary services on long-term insurance policies without being licensed to do so in terms of the Act; and

- The Long-Term Insurance Act by inducing consumers to buy or continue long-term insurance policies by offering a competition draw that made them eligible to win various types of prizes.

Other recent fines handed down by the Enforcement Committee include:

* Prosperity Group was fined R50 000 for negligently allowing at least one staff member to sell fraudulent life assurance policies to earn commissions. Prosperity clients had their bank accounts debited for the premiums.

The Enforcement Committee found the negligence was a contravention the FAIS Act’s general code of conduct for authorised financial services providers (FSPs) in that Prosperity failed to render financial services with due skill, care and diligence and in the interests of clients and the integrity of the financial services industry when it failed to put in place proper internal controls to prevent or detect the submission of fraudulent applications for insurance cover by its employees.

Prosperity accepted responsibility for the contravention, reported the case to the police, assisted the police in apprehending one of the suspects, reversed the commissions and reimbursed the clients whose accounts were debited as a result of the fraudulent cover.

* FSP Clement Karabo Phakane was fined R25 000 and FSPs Roderick Charles McFarquhar and Gidimag CC were each fined R10 000 for contravening the FAIS Act by marketing and/or advertising the services of foreign-based Safecap Investments trading as Markets.com, which was not an authorised FSP nor a representative of an authorised FSP.

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