Calling an investment arrangement a stokvel does not automatically place its activities outside the regulatory framework governing financial services. Nor does providing investment assistance without charging for it remove the obligation to comply with the FAIS Act.
The Financial Services Tribunal has dismissed Khwezi Jackson’s application to have a five-year debarment imposed by the Financial Sector Conduct Authority (FSCA) reconsidered, finding that his involvement went beyond the activities permitted under the stokvel exemption.
Jackson was found to have contravened section 13(1)(a) of the FAIS Act by rendering financial services on behalf of entities that were not authorised financial services providers (FSPs). The FSCA initially proposed a 15-year debarment but reduced this to five years after considering his representations. The Tribunal has now upheld that decision.
The case involved Khanyazania Holdings (Pty) Ltd, Khanyazania Investment Club and Azania Investors (Pty) Ltd, and centred on Jackson’s role in facilitating investments through the clubs.
Jackson was an authorised representative of another financial services provider at the time. However, his involvement in the investment clubs was not undertaken on behalf of that provider. Instead, he helped the clubs propose and facilitate investments, despite the entities not being authorised FSPs themselves.
An investment facilitator, not a decision-maker?
The FSCA investigated the activities of the three entities and three individuals, including Jackson, to establish whether they had contravened financial sector legislation.
At the time of the suspected contraventions, Jackson was an authorised representative of another FSP.
Following its investigation, the FSCA issued a notice on 1 September 2025 setting out its intended findings and sanctions. These included debarment orders against Jackson and two other individuals, as well as proposed administrative penalties of R1.5 million against the entities for contraventions of section 7(1) of the FAIS Act.
Jackson disputed the FSCA’s findings, describing his role as limited to proposing investment options for members to consider. The investments were executed through an Easy Equities stockbroking account opened in the Investment Club’s name.
He said he had no authority to make investment decisions unilaterally, no managerial control over the clubs, and no access to or signing powers over their accounts. Decisions were made collectively by members.
He also argued that his involvement was neither commercial nor managerial. He had been approached because of his social connection with one of the individuals involved, his academic background and familiarity with financial markets. He assisted voluntarily with facilitating investment transactions and was himself an active contributing member.
But the Tribunal was less concerned with who had the final say over investment decisions than with the nature of the services Jackson provided.
Collective decisions do not remove the need for authorisation
Under the FAIS Act, advice includes a recommendation, guidance or proposal of a financial nature made to a client in respect of an investment in a financial product. Intermediary services cover other acts performed by a person for or on behalf of a client or product supplier.
The Tribunal found that Jackson’s own account of his involvement established that he had made investment proposals and participated in activities that resulted in clients entering into transactions involving financial products.
It did not matter that members made decisions collectively, that Jackson had no formal management position or that he did not control the clubs’ bank accounts.
His academic background and familiarity with financial markets had brought him into the arrangement in the first place. The Tribunal found that his participation amounted to providing advice as defined in the Act.
Neither did the fact that he received no remuneration offer a defence. His involvement was sufficient to bring him within the prohibitions in sections 13(1)(a) of the FAIS Act and 153(1)(c) of the Financial Sector Regulation Act (FSRA).
Section 13(1)(a) prohibits a person from carrying on business by rendering financial services to clients for or on behalf of an entity that is not authorised as an FSP and is not exempted from the relevant provisions of the Act.
Section 153(1)(c) of the FSRA provides for debarment where a person has attempted, conspired with, aided, abetted, induced, incited or procured another person to materially contravene a financial sector law.
An Instagram page that opened the door to the public
Jackson also relied on the exemption for financial societies and stokvels under Board Notice 43 of 2013.
The notice exempts burial societies and stokvels from section 7(1) of the FAIS Act when rendering financial services to or on behalf of their members in respect of an assistance policy.
However, the exemption has specific requirements. A stokvel is defined as a group of natural persons who share a common bond and form an invitation-only savings or rotating credit scheme, with members pledging mutual support towards achieving specific objectives.
The Tribunal emphasised that this is not an arrangement open to anyone who wants to participate.
The FSCA’s investigation found that the Khanyazania Investment Club was open to members of the public. During an interview, Jackson confirmed that anyone interested could join and that membership was not restricted to family members and friends.
The club also had an Instagram page with 34 followers, which it used to market its services.
The FSCA regarded this as evidence that the club was soliciting members of the general public to invest their money. The Tribunal agreed, finding that the marketing activity was inconsistent with the invitation-only nature of a stokvel.
There was another limitation to the exemption. Board Notice 43 does not provide a general exemption for pooled investment arrangements. The financial services contemplated must relate to an assistance policy, as defined in the Long-term Insurance Act.
The clubs’ arrangements therefore did not qualify for the exemption simply because members pooled their money towards a common investment objective.
Neither Khanyazania Holdings nor Azania Investors was an authorised FSP. Jackson was also not acting as a representative of an authorised FSP in performing the activities in question.
The Tribunal rejected his argument that his private, voluntary and unpaid involvement changed the regulatory position. The activities themselves, rather than the capacity in which he claimed to perform them, determined whether the applicable requirements had been met.
Why the five-year debarment stands
The FSCA initially proposed a 15-year debarment but reduced it to five years after considering Jackson’s representations, including his argument that his role had been limited.
Jackson challenged the shorter period as well, arguing that the sanction was excessive and unreasonable.
He pointed to his qualifications and experience in financial markets. The Tribunal said these were reasons why he knew, or should have known, that materially assisting another person to contravene financial sector legislation was inexcusable.
It also considered the factors set out in section 167 of the FSRA, which deals with administrative penalties, and found no indication that the FSCA had misdirected itself in applying them.
The reconsideration application was dismissed on 27 October 2026, leaving the five-year debarment in place.
Read the full judgment here.
