The Registrar of Financial Services Providers (Registrar) referred a matter against EQ.FIN (Pty) Limited (EQ.FIN) to the Enforcement Committee of the Financial Services Board. The referral relates to a contravention of regulation 3(b) of the Financial Advisory Services Regulations, 2003, prescribed in terms of section 35 of the Financial Advisory and Intermediary Services Act, No 37 of 2002.
During the period 1 February 2012 to 30 September 2012, EQ.FIN published advertisements and communications that implied that it was an authorised financial services provider, whilst it was not so authorised.
According to the Enforcement Order, EQ.FIN was an affiliate of Liberty Life, but not an authorised FSP, or the representative of an authorised FSP.
The Registrar took into account the substantial number of mitigating factors, including accepting full responsibility for the contravention, fully co-operating with the investigation, rectifying the breach without any delay and rewording its website, Facebook and Twitter sites and amending its e-mail signatures, letterheads and business cards. The parties agreed to a penalty of R150 000.
It is difficult to establish how the quantum of the fine is determined. A transgression such as the one indicated above seems relatively innocent. One wonders how many clients suffered loss because of it, and if so, how much?
At its annual FAIS Conference last year, the FSB made it clear that transgressors should not benefit from acting outside of the law. It also stated that fines should be a deterrent for others who may be considering similar actions.
The only FSP with an apparent link that I could find on the FSB website was an FSP called Equifin whose licence had been withdrawn on 03/10/2011. It is possible that they came to an agreement with Liberty to work on a franchise business from February last year, and was unaware that they had to be licensed separately.
Normally, if a compliance officer (CO) establishes a material breach of this nature, he advises the FSP, and gives it time to rectify the shortcoming. Should this not happen, the CO is obliged to report the matter to the FSB.
Whilst some of the information above is speculative, it is perhaps a reminder to all of us to make sure our houses are in order. If you have not yet registered on the FSB website in order to be able to verify your information there, now may be a good time to do so.