R E and Qualifications Fraud

In a holding statement published on Thursday, 15 June, the Financial Planning Institute (FPI) responded as follows to a media release by the FSB:

Falsification of Regulatory Examination Results and Issuance of Fraudulent Certificates

On behalf of Godfrey Nti, Chief Executive Officer, Financial Planning Institute (FPI)

“Following the announcement made yesterday, by the Financial Services Board (FSB), on the high increase of debarment cases in the last year due the qualification and examination fraud which was discovered by the Financial Planning Institute (FPI). The investigation, initiated by the Institute in 2013 and concluded in 2014, uncovered evidence of collusion and falsification against 120 examinations and/or qualification records.

Based on the findings, FPI terminated the employment of the three employees involved in the scheme. It also reported the matter to the Financial Services Board (FSB), Insurance SETA (INSETA) and South African Police Service (SAPS) Commercial Crimes for further investigation and criminal prosecution against the perpetrators.

Even though none of the suspected examination candidates are members of FPI, the Institute has a zero tolerance for any act of fraud, given the high standards that FPI expects of all financial advisors in the industry. Since the investigation files were handed over, FPI has cooperated fully with FSB and SAPS to help further their respective investigations. FPI will continue doing so until criminal and administrative action has been taken against all the suspected candidates and ex-employees.

FPI is committed to the highest ethical standards. Its internal security measures, systems and processes have since been carefully re-examined and additional security protocols have been implemented to ensure that this situation never repeats itself.”

FSB Media Statement

On 14 June 2017, the FSB released a media statement titled, “Regulatory Examination and Wealth Management Qualification Fraud”.

“The industry will have seen an increase in the number of debarments cases over the last year. The main reason for this increase is that qualification and examination fraud was discovered by the Financial Planning Institute of Southern Africa (FPI) which has required the FSB to take action against a large number of individuals.

The fraud case found that specific FPI employees and a number of candidates were involved in a dishonest scheme that resulted in the falsification of their examination and/or qualification results and the issuance of fraudulent certificates.

An initial investigation was conducted by the FPI and criminal charges were laid against the implicated FPI employees. The FSB was informed of the matter in 2014 and launched an inspection to gather evidence against 120 representatives and Key Individuals who had allegedly benefitted from the fraud. Debarment action commenced in 2015 and is ongoing with at least 60 cases still underway.

The FSB also conducted an audit of the FPI Examination Body’s internal security measures, systems and processes. Following the audit, the FSB recommended additional security protocols to ensure that a similar situation does not arise in the future – recommendations that the FPI has adopted and implemented.

The FSB continues to work closely with the recognised examination bodies, to ensure that all security measures are fully functional at all times. The FSB sees the regulatory examinations and the authenticity of qualifications as a critical component of the competency requirements for financial services providers, and as such the integrity of the examinations and qualifications must be protected at all times.”

Appeal Board Decision

We recently reported on a case where an appellant felt that a debarment period of three years was excessive after he was found guilty of having paid a former employee of an examination authority an amount of R1 000 in return for a pass result for the RE1 and RE5 examinations after having failed repeatedly.

The Appeal Board, in its decision, felt that the sentence could have been harsher.

Click here to read the Moonstone article.

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