The financial services industry is one of the most tightly regulated industries in South Africa, and with good reason your money is at stake. Regulations evolve as the industry evolves, and consumers of financial products and services need to keep up-to-date with the changes.
Recently, the Financial Sector Conduct Authority FSCA outlined where it would focus its enforcement actions in the year ahead and its regulatory plans for the next three years, while the Ombud Council published new rules on complaints to the Ombud for Financial Services Providers, widely known as the Fais Ombud.
Enforcement focus
In its FSCA Regulatory Actions Report 2023/24, the authority identified several focus points in the coming year, including the following
- Assisted online trading and signalling. The FSCA says it has seen an increase in cases in which individuals assist online traders either by signalling potentially profitable trades or by letting them copy their trades, a practice known as copy trading. Trading in this way is highly risky and the individuals offering these services do not have the required authorisation to act as financial services providers.
- Investments in livestock. There has been a rise in schemes that offer investments in farming operations, such as livestock and harvests promising investors a share in the profits. For example, you may be invited to invest in a cow with a promise of a share in the profits on the sale of the cow or its offspring. In many cases the schemes are unlawful, as they are not registered as deposit-taking institutions, and some are outright scams. We are actively investigating these activities and will prioritise enforcement actions in this area, the FSCA says.
- Finfluencers. Social media influencers who publish financial and investment-related content, and sometimes promote financial products, play a positive role in enhancing financial literacy and encouraging participation in financial markets. However, the FSCA is concerned that consumers are making financial decisions based on the advice of celebrities, rather than through the recommendations of authorised financial advisers.
- Unauthorised crypto services. Crypto asset service providers Casps have been given the opportunity to register with the authority, and many Casps licences have already been issued. There remain, however, many entities providing these services unlawfully.
- Funeral parlours. In its previous report, the FSCA said it had formed a dedicated investigation team within its enforcement division to deal with the proliferation of unregistered businesses in the funeral parlour industry and illegal practices such as the self-underwriting of insurance policies and unauthorised collection of premiums from consumers. The FSCA and the Prudential Authority have since joined in a project that will review insurance regulations affecting the funeral parlour market improve supervision and enforcement to achieve appropriate compliance-levels ensuring fair customer outcomes while minimising compliance costs and develop strategies to enhance financial literacy and awareness among funeral insurance consumers.
Three-year regulation plan
