The fraud was uncovered by the Financial Planning Institute of Southern Africa (FPI) and involved bribing FPI employees to falsify their exams and/or results and issue fake certificates.
After an initial FPI investigation between 2010 and 2013, the FSB was informed of the scam in 2014 and launched its own inquiry and gathered evidence against 120 FPI representatives and key individuals who benefitted from the fraud.
The regulator started taking action to ban those involved in the scam in 2015 but there are still at least 60 cases underway.
Suspicious results
Thabang Malimbe, the FSB’s head of Financial Advisory and Intermediary Services (FAIS), told local news website Moneyweb that a number of representatives “who were found to have obtained the regulatory examinations, as well as wealth management certificates, in an improper manner were debarred”.
FPI also told the publication that it became aware of the scam when “certain candidates, with a history of not passing the regulatory examinations, would all of a sudden pass with high markets or a set series of questions were answered in exactly the same way, while other answers on the same paper differed widely”.
The institute added that the companies of some of the employees sitting the exams also got in contact to say that they were suspicious of the results.
During the FPI’s own investigation, it identified three of its employees working in the exam department who had “colluded to falsify regulatory exam results of certain candidates in return for monetary payment”.
All three employees were found guilty of dishonesty and dismissed. They were also charged with fraud by the country’s commercial crimes unit.
Audit
The FSB said it views examinations and the authenticity of qualifications as a critical component of the competency requirements for financial services providers.
As a result, the regulator also conducted an audit of the FPI examination body’s internal security measure “to review and confirm that the additional measures put in place by the FPI were satisfactory to prevent a similar incident from recurring”.
