The Financial Services Board, though its enforcement committee, has penalised two large financial services providers for contravening regulations pertaining to their business.
In the first case, it fined Lion of Africa Life Assurance Company R200 000 for contravening the Policyholder Protection Rules issued under the Long Term Insurance Act. From 2012 to June 2016, Lion of Africa cancelled a number of funeral insurance group schemes without informing the Registrar of Long-term Insurance or policyholders of such cancellations.
In arriving at the penalty, the Registrar of Long-term Insurance took into account, as aggravating factors, that Lion of Africa had “failed to demonstrate sound insurance principles and practice in the interest of policyholders and that it failed to ensure that its internal controls functioned properly”. In mitigation, says the FSB, the registrar took into account that the company admitted the contravention, co-operated with the investigation and the subsequent enforcement action, and undertook to implement measures to prevent the contravention from recurring.
In the second case, the Registrar of Collective Investment Schemes referred Sanlam Collective Investments (SCI) to the FSB’s enforcement committee for contravening the Collective Investment Schemes Control Act (Cisca).
The registrar established that, from March 2005, SCI was a manager of the Lynx Sanlam Collective Investments Balanced Fund of Funds (previously known as the RWM Balanced Fund of Funds) and the Lynx Sanlam Collective Investments Cautious Fund of Funds (previously the RWM Cautious Fund of Funds). While managing these unit trust funds, SCI failed to failed to effect a quarterly income distribution as dictated by the funds’ supplemental deeds. Instead, the distribution was effected bi-annually.
The FSB says the parties agreed on a penalty of R10 000. In arriving at the amount, the registrar took into account that the contravention was a result of a genuine oversight and that SCI has audited all its existing supplemental deeds to ensure compliance with Cisca.