The Financial Services Board has fined Discovery Life and Regal Financial Services for contraventions to section 3A of the General Code of Conduct for Financial Services Providers. According to a Discovery Life spokesperson, the company has cooperated fully with the FSB, as has Regal Financial Services.
The Registrar for Financial Services Providers referred the case of the Enforcement Committee of the FSB due to matters surrounding employment negotiations between Discovery Life and Regal Financial Services.
“Discovery Life Limited engaged in employment negotiations with four financial advisors prior to 4 December 2014. These negotiations included discussions around the option to provide sign-on bonuses to these individuals. The finalised offers to these individuals, including the provision of sign-on bonuses, was issued to them on 5 December 2014, one day after section 3A came into operation. Regal provided a sign-on bonus to Mr T Davies after 4 December 2014 when section 3A came into operation,” explained the FSB.
When contacted for comment, a Discovery spokesperson said: “As per the FSB release dated 20 October 2016, Discovery Life has reached an agreement with the FSB with regard to an administrative penalty relating to the recruitment of four advisors within Regal Financial Services which occurred in December 2014. The penalty relates to the finalisation of the recruitment of the advisers on 5 December 2014, 24 hours after the publication of the new regulations referred to in the FSB release. It must be noted that while the paperwork in respect of these advisors was concluded post the publication of the regulations, the negotiations and process pre-dated the deadline. Discovery regrets that this administrative oversight occurred and have reversed the payments made to the four advisers in line with the agreement reached with the FSB.
“Regal has similarly cooperated fully with the Financial Services Board at all times to address and remedy the administrative oversight which occurred.”
The sign-on bonuses recovered from the advisors will be paid to the FSB as part of an administrative penalty of R2.5 million which was imposed on Discovery Life, the FSB revealed. “The Enforcement Committee took numerous mitigating factors into account, including the fact that Discovery has undertaken to reverse and recover the sign-on bonuses, as well as the fact that Discovery has, at all times, fully co-operated with the FSB,” noted the FSB.
Regal Financial Services will pay an administrative penalty of R200,000.
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