The Financial Sector Conduct Authority FSCA has debarred Mr Floris Slabbert and Mr Anton Hay, the key individuals of Ecsponent Financial Services (Pty) Ltd (Ecsponent FS), for a period of two years.
This enforcement action follows the withdrawal of Ecsponent FS’s license (FSP number 32968) for breaching several financial sector laws. It is the view of the FSCA that Slabbert and Hay contributed significantly to the breaches.
On 4 June 2020 the FSCA withdrew the licence of Ecsponent FS, having found that the company did not conduct suitability testing before selling a product to clients. The FSP used a network of representatives to market the shares of its parent company, Ecsponent Ltd, which raised capital through the sale of redeemable preference shares. During interactions with potential clients, Ecsponent FS staff provided advice on the investment product, i.e. the classes of preference shares. While the classes of shares that paid monthly dividends were popular amongst pensioners as they mimicked a monthly pension payment, the one major difference between them and a pension investment was that they exposed investors to more risk.
The FSCA’s investigation entailed extensive interaction with Ecsponent FS, mainly because the FSP 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 advisor 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 advisor.
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 expected of FSPs as outlined in the FAIS General Code of Conduct (section 8 of the Code).
The FSCA encourages FSPs and key individuals to always act in the best interests of their clients and treat them fairly.
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