A recent decision by the Enforcement Committee (EC) again raised questions about penalties meted out to transgressors.
Pieter and Samantha de Wet, trading illegally as Petite Models CC, were each fined R75 000 for running a short-term insurance business without being duly registered with the FSB, nor utilizing the services of a registered insurer or underwriter.
From October 2010 to April 2013 they collected R5 219 520 from some 880 clients.
A total of 22 complaints were laid with the FAIS Ombud subsequently, and De Wet was ordered to repay their disallowed claims. No mention is made of the premiums collected illegally. One would think that, as the clients had no legal cover, they should also have had their premiums refunded.
In arriving at the fines mentioned above, the EC says:
“It is also important to bear in mind the deterrent effect. We were given the advantage of a list of penalties imposed by the Enforcement Committee over the years and for the sake of consistency and having regard to all the circumstances, we consider the penalty should be R75 000 for respondent number one and R75 000 for the second respondent. The respondents are ordered to pay the costs of the enquiry, which includes any actual expenditure and the fees of the panel of members of the Enforcement Committee.”
Having to pay R150 000 after having “earned” R5 million hardly seems like a deterrent. An earlier decision against Bayport Financial services, a duly registered funeral parlour who failed to register its representatives, led to a fine of R500 000.
Sanlam Collective Investment Schemes had to pay an administrative penalty of R10 000 for paying out an income distribution on a biannual basis whilst it was supposed to do so on a quarterly basis. No mention is made of the sums involved.
It is extremely difficult, if not impossible, to establish how these penalties are arrived at. One can only hope that, in the planned new future, structure and guidelines will be provided to make sure that the penalty fits the transgression.