As part of South Africa’s ongoing efforts to exit the grey list, the Financial Sector Conduct Authority has significantly ramped up enforcement over the past few years – imposing tougher penalties to deter financial misconduct. But while accountability is increasing on paper, questions remain: how much of these fines are actually collected, and do they translate into real relief for victims of financial wrongdoing?
These issues were unpacked during a media roundtable following the release of the FSCA’s Regulatory Actions Report for 2024/25.
Since 2021, the total value of penalties imposed by the FSCA has surged by 197%, rising from R11.98 million to R35.58m. In the latest reporting period, the Authority issued 51 administrative penalties amounting to R119.8m. Of this, R17m related to contraventions of the Financial Intelligence Centre Act (FICA), with most penalties stemming from breaches of the Financial Advisory and Intermediary Services Act and anti-money laundering rules.
Although the FSCA’s penalties serve as important accountability measures, victims may still ask: how does this help us recover what we lost?
FSCA Commissioner Unathi Kamlana (pictured) said the regulator’s success in collecting penalties is a “mixed bag” because of several structural and legal challenges.
“To the extent that we are successful, some of these businesses are unable to continue operating, and therefore they can’t pay the penalty,” he said. Collections are typically led by the FSCA’s finance unit, but when firms go into business rescue or liquidation, the Authority hands the matter to attorneys – particularly when the likelihood of recovery is low.
Kamlana noted that the FSCA does not benefit directly from penalties collected.
“Penalties are for the National Revenue Fund and not for the funding of our operations,” he said.
The FSCA can recover investigation costs from fines, but if that fails, it funds itself through levies collected from the financial sector.
The limits of investor relief
On whether the FSCA plays a role in helping investors recover funds, Kamlana said it depends on the circumstances.
“The reality is that sometimes by the time we get involved, there is no longer any funds that we can do anything about, certainly including considering paying investors back,” he said.
Even tracing those affected can be difficult, because some victims are reluctant to come forward due to the nature of the schemes they bought into.
Although the Financial Sector Regulation Act does create space for potential restitution, Kamlana said it remains a challenge in practice.
“When we are able to do something about it, we do. But in many instances, the reality is that we aren’t able to do so.”
Helping where they can
The FSCA’s head of enforcement, Gerhard van Deventer, said that although recovering investor losses is not part of the regulator’s core mandate, his team takes every opportunity to assist when possible.
“We’re not geared for it,” he said. “But there’s a big but. My commissioner’s attitude is where you can help victims, please do so.”
Van Deventer said insider trading is one area where the FSCA can distribute recovered penalties to affected market participants.
“The law in the insider trading space is written in such a way that… we are permitted to use that penalty to deliver it up to the persons in the market that traded in the opposite direction during a specific period (in that same period).”
In other cases, if money is located during a forensic investigation – typically in bank accounts – the FSCA works with the Financial Intelligence Centre (FIC) to freeze the funds for up to 10 days. That period allows the regulator to engage the Asset Forfeiture Unit (AFU) of the National Prosecuting Authority (NPA) to secure a preservation order.
“Usually, the AFU appoints a curator… who is then geared to get that money back – or some of it – to investors and victims,” Van Deventer said.
He added that in some cases, the FSCA negotiates enforceable undertakings, where the entity under investigation agrees to repay investors as part of a settlement. In others, the FSCA may reduce a penalty if the offender compensates affected clients.
However, Van Deventer cautioned these efforts are not part of the FSCA’s core operations.
“That’s why we don’t really report on it on an annual basis,” he said.
A broader consumer focus
FSCA Deputy Commissioner Katherine Gibson said the Authority is also widening its focus to scrutinise everyday practices by licensed financial institutions – not just overt fraud.
“From a strategic perspective, we are starting a different conversation, which is how to increasingly hold our licensed entities accountable for even the regular day-to-day work,” she said.
Gibson noted that some businesses, while not engaging in outright misconduct, may still harm consumers through their operational practices.
“An entity may not have stolen money, but actually the way in which they’re running their business, their day-to-day practices, may be having negative outcomes anyway, on their consumers.”
This shift raises new regulatory questions.
“What is the role of the regulator in bringing about some kind of balance between the losses they have suffered through these bad practices?” Gibson asked. “I don’t have an answer for it. It’s definitely a discussion and an engagement that is going to be ongoing.”
