The Financial Sector Conduct Authority has fined a funeral parlour and its directors more than R11.4 million for conducting financial services and insurance business without authorisation.
The directors of Sanda Funeral Home (Pty) Ltd, which is in Uitenhage in the Eastern Cape, have also been debarred.
According to the Authority’s administrative penalty order of 13 December last year, Sanda and its directors and key individuals, Sandile Michael Sanda and Zisanda Sanda, contravened the FAIS Act and the Insurance Act from 15 June 2021 to 15 August 2022.
The contraventions related to the sale of funeral insurance policies to about 367 clients.
Specifically, the sanctioned parties contravened section 7(1) of the FAIS Act and section 5(1) of the Insurance Act.
Section 7(1) of the FAIS Act prohibits any person from rendering financial services as a financial services provider unless they are licensed by the FSCA or fall within an exemption provided by the Act.
In terms of section 5(1) of the Insurance Act, no individual or entity can operate as an insurer – offering, underwriting, or carrying risk under insurance policies – without authorisation from the Prudential Authority.
The Authority debarred Ms Sanda for 20 years and Mr Sanda for 10 years. During their respective debarments, they are prohibited from:
- providing, or being involved in the provision of, financial services;
- acting as a key person of a financial institution; and
- providing specified financial services to a financial institution, whether under outsourcing arrangements or otherwise.
The FSCA fined the funeral parlour and the Sandas R11 495 001.
The Authority told Moonstone that it determined the penalty after considering the factors set out in section 167(2) of the Financial Sector Regulation Act.
It also takes into account the FSCA Sanctions Guideline, which is designed to ensure that the Authority’s enforcement process creates a “credible deterrence to conduct that is harmful to financial customers, and that is efficient, meaningful, and dissuasive, but also fair, consistent, appropriate, and proportionate”.
The Authority said the disgorgement of ill-gotten gains plays a role in deciding on an administrative penalty. “In the present matter, the FSCA took into account the (unlawful) premium that Sanda Funeral Home collected over the period of contravention.”
Asked whether it has issued any instructions to Sanda Funeral Home with regard to the affected clients and policies, the FSCA said it served Sanda with a directive to cease its operations.
Attempts by Moonstone to contact Sanda for comment were unsuccessful.
They will just pop up under a different name same modus operandi, even the debarred persons just appoints other family members as so called owners while the debarred persons still swings the cat.