Advisers face expulsion if found to be acting against FPI code

By Staff Writer

Advisers who recommended Herman Pretorius’ Relative Value Arbitrage Fund (RVAF) to clients and who breached the code of the Financial Planning Institute (FPI) could have their membership to the body terminated.

Prem Govender, FPI’s chairperson, and Godfrey Nti, CEO of the FPI, both said that advisers found to be in breach of their code of ethics after recommending Pretorius’ fund to clients could face disciplinary action, termination or suspension of their membership. The FPI’s findings would also be sent to the Financial Services Board (FSB). “They would be subject to a disciplinary hearing and it would depend on that outcome. We could expel them as members. They could have their certified financial planner designation taken away,” said Govender.


However, Govender admitted that those advisers that are expelled from the FPI could still provide financial advice to clients if the FSB take no further action. “They could still operate as financial advisers provided the FSB doesn’t take away their licence. We do have an arrangement with the FSB and the FAIS Ombud to report our members if they are guilty. Membership to the FPI is not mandatory but the licence [to operate as a financial advisor] from the FSB is,” she explained.


FPI encourages consumers to ask questions
Govender said the FPI encouraged clients to find out if their advisers had been expelled from professional bodies, like the FPI, before they take on their services. But she added that being part of a professional body will not provide full-proof protection.


“They (clients) should find out if their advisers are licensed, what are their qualifications are and what bodies they belong to. I am not saying that if a financial advisor meets all these criteria that consumers will be free from scams. If you belong to a professional body that doesn’t mean that you will necessarily act in the best interest of the consumer but what we are saying is that the consumer will get some kind of protection because they can go back to the authorities and have these advisers investigated.”


She added that clients could protect themselves further by ensuring that their advisor is recommending a regulated product which is overseen by the FSB and checking to see if the advisor is registered with the FSB.


Thousands lost money by investing in the RVAF fund
Nti said that around 3,000 investors had invested in the RVAF fund, which was liquidated last year. The FPI said this week that they would open up an investigation which would look at whether their members were involved in any way and are appealing for members of the public to come forward with any information.


“From our point of view it’s important that we are responsible as an organisation. Should our members have done something that they did wrong we must hold them to account and take them through the disciplinary process. We are not a membership organisation that protects its members; we are here for the public. We want to ensure that members are worthy of their designation,” said Nti.

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