FSCA fines unauthorised financial services provider and owner R9m, debars him for 20 years

The FSCA has fined an unauthorised financial services provider and its owner R9 million and fined someone who worked for him R50 000 for rendering financial services without authorisation. The Financial Sector Conduct Authority (FSCA) announced in a statement today that it is taking regulatory action against Bhaca Green (Pty) Ltd, as well as Songeziwe Mbalo and Lungile Mgilane The regulatory action follows an FSCA investigation of Bhaca Green, Mbalo and Mgilane. The investigation found that Mgilane rendered financial services to clients on behalf of Bhaca Green and Mbalo.

At the time, the FSCA says, neither Mbalo nor Bhaca Green was authorised as a financial services provider (FSP). Therefore, Mgilane contravened section 13(1)(a) of the Financial Advisory and Intermediary Services (FAIS) Act. According to section 13(1)(a), nobody is allowed to carry on business by rendering financial services to clients for or on behalf of anyone who is not authorised as a financial services provider and is not exempted from the application of this act relating to the rendering of a financial service.

The FSCA also found that Mbalo and Bhaca Greencollected funds from investors with a view to trade in forex on their behalfbetween January 2019 and December 2020. However, the FSCA points out, the majority of the funds received from investors were used to pay purported returns to other investors and cover Mbalo’s personal expenses, with only a small fraction used for trading purposes. The FSCA says this conduct constituted a contravention of section 7(1) of the FAIS Act, as Mbalo and Bhaca Green acted as unauthorised Category II FSPs when they offered and/or rendered advice, as well as intermediary services in respect of forex products. Section 7(1) deals with the authorisation of financial services providers and provides that nobody is allowed to act or offer to act as a financial services provider, unless a licence was issued to the person under section 8 or a representative, unless that person was appointed as a representative of an authorised financial services provider under section 13.