The Financial Sector Conduct Authority (FSCA) has debarred two key individuals linked to investment firm Ecsponent Financial Services.
Floris Slabbert and Anton Hay have been banned for two years, as they have “contributed significantly to the breaches” of financial services laws.
The South African regulator withdrew the firm’s licence on 4 June 2020.
The FSCA said it found the company did not carry out suitability testing before selling products to clients.
Ecsponent used a network of representatives to market the shares of its parent company, Ecsponent Limited, to raise capital.
Unlawful agreements
The firm’s staff gave financial advice on the redeemable preference shares, intended to mimic a monthly pension income payment to its clients, most of which were pensioners.
But the FSCA said that, contrary to pension payments, Ecsponent advisers exposed investors to a much higher risk.
The watchdog added: “The FSCA’s investigation entailed extensive interaction with Ecsponent FS, mainly because the financial services provider was of the view that it was not required to conduct suitability testing and relied on a specific financial service agreement wherein the investor instructs the adviser or intermediary not to perform a comprehensive financial needs analysis, but to render a specific financial service.
“Ecsponent FS argued that by signing the agreement, the investor understood that a full analysis would not be undertaken by the adviser.
“The FSCA held that such an agreement was unlawful, and that Ecsponent FS could not rely on it. The Authority also found that Ecsponent FS was in breach of suitability standards.”
