The FSCA has appointed a statutory manager for N-e-FG Administrators (Pty) Ltd, saying it is concerned about N-e-FG’s failure to manage the funds it administers responsibly.
It is also investigating N-e-FG’s conduct relating “to certain life insurance annuity policies”.
The FSCA withdrew N-e-FG’s licence on 22 December last year for contravening the FAIS Act, the Fit and Proper Requirements, and the General Code of Conduct.
The Authority said its withdrawal of N-e-FG’s licence was subject to certain conditions aimed at ensuring that the interests of customers would be protected. “N-e-FG has failed to comply with these conditions.”
Vanderbijlpark-based N-e-FG started business rescue proceedings in September last year. “By virtue of the business rescue proceedings alone, it appears that N-e-FG is likely to be in an unsound financial position,” the Authority said.
N-e-FG is a pension fund benefits administrator in terms of section 13B of the Pension Funds Act, and it has not been complying with certain prescribed conditions for benefit administrators, the FSCA said.
The Authority has appointed Krishen Ganas Sukdev as the statutory manager of N-e-FG, effective 30 May, in terms of section 5A of the Financial Institutions (Protection of Funds) Act. The High Court must confirm Sukdev’s appointment within 30 days.
The FSCA said Sukdev was a qualified actuary “with extensive experience in the retirement funds sector”.
The Authority said the appointment of a statutory manager was “in the best interest of financial customers, as it will assist in ensuring that N-e-FG conducts its benefit administration business in compliance with the prescribed conditions for benefit administrators and in accordance with instructions from the Pension Funds Act”.
Reasons for licence withdrawal
The FSCA withdrew N-e-FG Administrators’ licence for the following contraventions of the FAIS Act:
- Section 8A(a), which requires an FSP, key individual and representative to comply with the Fit and Proper Requirements; and
- Section 19(2), which requires an FSP to submit externally audited financial statements to the FSCA.
It also contravened section 8(1)(a) of the Fit and Proper Requirements, which requires an FSP, key individual and representative to be honest and have integrity, as well as the following sections of the General Code of Conduct:
- Section 2: an FSP must render financial services honestly, fairly, with due skill, care and diligence, and in the interests of clients and the integrity of the financial services industry;
- Section 3(1)(a)(i): an FSP must make representations and provide information to clients that is factually correct;
- Section 3(1)(b): an FSP must disclose to a client potential or actual conflicts of interest; and
- Section 3(1)(d): an FSP must render services in accordance with the contractual relationship and reasonable requests or instructions of the client, “which must be executed as soon as reasonably possible and with due regard to the interests of the client, which must be accorded appropriate priority over any interests of the provider”.
The notice, published on 7 March, in which the FSCA withdrew N-e-FG Administrators’ licence also withdrew the Category II licence of N-e-FG Fund Management (Pty) Ltd for the same contraventions.
N-e-FG Administrators and N-e-FG Fund Management are part of N-e-FG Holdings.
The FSCA asked customers who have had any dealings with N-e-FG in respect of annuity policies to contact Louisa Basitere at louisa.basitere@fsca.co.za. They can also contact Sukdev at krishen@keyprotect.co.za to verify the legitimacy of these policies.
The FSCA said it would “continue to monitor the situation closely and take appropriate regulatory action to ensure that financial customers remain protected if any further wrongdoing is uncovered during the course of the investigation”.
