The FSCA has withdrawn the licence of The Wealth Strategist (Pty) Ltd, whose directors were also directors of the N-e-FG Fund Management and N-e-FG Administrators (which rebranded as Phahamisa Administrators).
The Wealth Strategist closed when N-e-FG collapsed two years ago.
Members of retirement funds whose assets were administered by N-e-FG Administrators are still owed about R470 million. The FSCA placed the administration company under statutory management in June 2022.
The Authority stripped N-e-FG Administrators and N-e-FG Fund Management of their FAIS licences in December 2021. It cited contraventions of the FAIS Act, the Fit and Proper Requirements, and the General Code of Conduct as the reasons for withdrawing their authorisation.
In a statement on Tuesday, the FSCA said it withdrew The Wealth Strategist’s licence because of several compliance failures.
The Wealth Strategist did not stop doing financial services business with N-e-FG Fund Management even though it was fully aware that the latter’s licence had been withdrawn. This is a contravention of section 7(3) of the FAIS Act.
The company did not act against one of its representatives who admitted to having forged fund reports, creating an impression that the reports were prepared by various fund managers licensed by the FSCA. The said individual remains a representative of The Wealth Strategist. This is a contravention of section 13(2) of the FAIS Act.
The Wealth Strategist did not comply with the Fit and Proper Requirements for directors in terms of section 8(10)(a)(i) of the FAIS Act. The directors of The Wealth Strategist were also directors and representatives of N-e-FG Fund Management and N-e-FG Administrators, whose licences were withdrawn.
The Authority said a notice of intention to withdraw The Wealth Strategist’s licence was sent to the entity on 28 August 2023. It did not respond to the notice.
The Wealth Strategist may no longer operate as a financial services provider under the FAIS Act and may not render any financial services to clients, or on behalf of any financial product providers, as described in section 3 of the Financial Sector Regulation Act.
According to the statutory manager, Krishen Sukdev, the retirement fund assets held by N-e-FG on behalf of members were not invested according to the investment mandates but “in high-risk assets outside the given mandates”.
In his report of November 2023, Sukdev said the Hawks and the FSCA are still investigating whether any of the assets can be recovered for distribution to members.
The initial investigations have found there are no assets in the funds and minimal member records, making it difficult to ascertain what the members contributed, Sukdev said.
The FSCA suspended Phahamisa’s licence in September last year.
