The Financial Planning Institute (FPI), the independent professional body for financial planners in South Africa, said it is investigating the possible breaches of its code of ethics and professional responsibility by some of its members who recommended clients invest their money in the Relative Value Arbitrage Fund (RVAF).
Herman Pretorius set up the fund in 2004 but it was liquidated after he allegedly shot his business partner before turning the gun on himself last year. Investors in the unregulated fund are reported to have lost hundreds of thousands of rands.
“According to several media reports the RVAF scheme is alleged to have defrauded thousands of investors, this having been potentially facilitated by questionable investment recommendations made by their financial planners or advisors,” said the FPI.
Prem Govender, FPI Chairperson, added: “FPI, being a professional body with ultimate public benefit responsibilities and which prides itself in ensuring that its member[s] are highly competent, professional and adhere to a strict code of conduct, views any development that has the potential to negatively affect the trust relationship between consumers and its members in a serious light. We are therefore launching this investigation in order to protect the integrity of this vital trust relationship. Should the investigation uncover any instance of alleged member wrong-doing, we will be quick to act in accordance with our disciplinary regulations.”
Godfrey Nti, FPI CEO, added: “Professional members of the FPI are bound by a strict code of ethics and professional responsibility which provides clear standards of conduct regarding investments products, whether regulated by the FSB or not, and our members are strictly obliged to adhere to the code in its entirety.
“It is FPI’s view that more can, and should, be done from a legislative and regulatory standpoint to better protect investors and also to ensure that a vital trust relationship flourishes between financial advisors and the South African investor public. We are developing practical solutions in this regard and will continue advocating for their implementation by the relevant stakeholders.”
The FPI’s investigation comes after other industry bodies said they would investigate the fund last year or appeal for members of the public who’d invested in the scheme directly or through advisors to step forward. The FAIS Ombud said investors can lay complaints against advisors by contacting them, while the Financial Services Board confirmed to Justmoney last year that it would also investigate all affected advisors. According to reports, the RVAF Trust was also being investigated by The Directorate for Priority Crime Investigation (Hawks).
The FPI said professional members and the general public with information that could aid in this investigation should contact Advocate Jacqui Grové, FPI legal and compliance manager on Tel: 011 470 6021 or email: jacqui@fpimail.co.za.