The enforcement committee of the Financial Services Board has imposed penalties on two financial services providers: life assurance company Assupol (fined R500 000) and financial advice firm Iza Wealth (fined R50 000).
Assupol was referred to the enforcement committee by the Registrar of Long-term Insurance. It was found that, from August 2014 to June 2016, the assurer remunerated its independent intermediaries by letting them share in underwriting profits – in contravention of the Long-term Insurance Act. In addition, from June 2012 to July 2015, Assupol contravened the Policyholder Protection Rules issued under the Act by rejecting claims without advising policyholders in its notice of rejection of their rights, as stipulated in the rules. In particular, Assupol failed to inform its policyholders of their right to lodge complaints under the Financial Services Ombud Schemes Act and the time limit for the institution of legal proceedings.
As aggravating factors, the registrar considered, among others, that Assupol failed to exercise proper oversight over its outsourced functions and that its failure to comply with the Policyholder Protection Rules had the potential of causing prejudice to the policyholders whose claims were rejected.
In mitigation the registrar took into account, among other factors, that Assupol admitted the contravention, co-operated with the registrar’s investigation and subsequent enforcement action, and undertook to implement measures to prevent similar contraventions from recurring and to address the oversight problems.
Consequently, the registrar agreed to a penalty of R500 000, which was imposed by the enforcement committee on April 13.
The case against Iza Wealth, referred to the committee by the Registrar of Collective Investment Schemes, related to a contravention of the Collective Investment Schemes Act. From April 2015 to September 2015 Iza Wealth advised two investors to invest in a foreign collective investment scheme that had not been approved by the registrar.
The parties agreed on a penalty of R50 000, which was imposed by the enforcement committee on April 7. The registrar took into account that the company expressed regret for the contravention, co-operated with the registrar, and undertook to rectify the convention by complying with the registrar’s instructions. The registrar was not aware of any prejudice caused to the affected clients as a result of Iza Wealth's actions.