Prinesha Naidoo
1 minute read
21 Oct 2016
9:23 am

FSB imposes R2.5m fine on Discovery

Prinesha Naidoo

Penalty relates to sign-on bonuses negotiated in 2014.

Image: Supplied

The Financial Services Board (FSB) has imposed a R2.5 million administrative penalty on Discovery Life, for contravening section 3A of the General Code of Conduct for Financial Service Providers.

The fine relates to Discovery’s recruitment of four financial advisers within Regal Financial Services, which occurred in December 2014.

The financial services group finalised employment offers – which included the provision of sign-on bonuses – with the four financial advisers on December 5 2014, exactly one day after amendments to section 3A of the code came into effect.

As per a Government Gazette notice, dated December 4 2015, section 3A of the General Code was amended such that a Category I financial services provider that is authorised or appointed to give advice may not receive a sign-on bonus and that no person may offer or provide a sign-on bonus to any person, expect for a new entrant, as an incentive to become a Category I provider.

The FSB classifies a sign-on bonus as any direct or indirect financial interest offered or received directly or indirectly, either upfront or deferred and with or without conditions, as an incentive to become a financial services provider.

“It must be noted that while the paperwork in respect of these advisers was concluded post the publication of the regulations, the negotiations and process pre-dated the deadline. Discovery regrets that this administrative oversight occurred and have reversed the payments made to the four advisers in line with the agreement reached with the FSB,” a Discovery spokesperson said.

Numerous factors including Discovery’s full co-operation with the FSB and its undertaking to reverse and recover the sign-on bonuses were taken into account when determining the value of the fine, the FSB said in a statement.

The FSB also imposed an administrative penalty of R200 000 on Regal Financial Services.

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