The FSCA is becoming tougher and quicker. But with online scams and unethical behaviour proliferating, can the regulator keep a lid on bad behaviour?
By Rob Rose
The debate over whether the pensions regulator is sufficiently proactive continues to swirl, amid scandals over the past year involving Akani and N-e-FG Administrators. Yet new figures from the regulator show that, despite criticism, there’s been a marked ramp-up in enforcement.
In its latest Regulatory Actions Report for the year to end-March, the Financial Sector Conduct Authority (FSCA) recorded a six-fold increase in penalties imposed on pension funds for late or missing returns.
In whole numbers, pension funds were hit with R2.59m in penalties this past year, compared with just R367 000 the year before.
Yet the value of fines levied in the pension industry remains barely a fraction of the R119m levied for misconduct in other parts of the financial sector. In particular, brokers were fined R82m for breaching the law, and insurance firms were penalised R17m.
While the trajectory is headed in the right direction, victims of pension-fund scams would be forgiven for feeling less upbeat – in particular, the hundreds of pensioners who saw R470m invested in funds operated by N-e-FG Administrators vanish.
Founded in 1999 by legal graduate Corne Jansen van Rensburg, N-e-FG operated mainly in Gauteng’s industrial heartland around the Vaal Triangle, and Today’s Trustee spoke to many investors from hospitals, industrial businesses and security firms in the region.
“Sadly, the likelihood of affected members recovering any of the embezzled funds is extremely low to none,” says one victim on a Facebook group set up to inform investors about the case. Another says that, unless some of her money is recovered, she would be “living under a tree”.
Decisions ‘misrepresented’
Frieda Olivier, who works at a hospital in the area, told Today’s Trustee some months back that she’d invested R300 000 through N-e-FG over many years. “With this gone, it means I can’t afford to retire,” she said.
Yet this is a scam the regulator first began investigating in September 2021, when it was tipped off by N-e-FG’s partner, Lion of Africa Insurance, that the funds weren’t being invested where Jansen van Rensburg said they were.
The FSCA’s initial investigation found that R111.8m of client funds had been diverted to an “unauthorised” company linked to Jansen van Rensburg. That money was then lent to private entities. “Investment decisions were made solely by Corne Jansen van Rensburg and Erik du Preez, who also issued investment statements that misrepresented the true nature of the investments,” the regulator said.
Finally, in November 2024, three years after the probe began, the FSCA slapped fines of R68m on the four main individuals at N-e-FG, while Jansen van Rensburg and Du Preez were barred from working in the industry for 30 years.
All four of those individuals have since applied to the Financial Services Tribunal – which acts as a final authority on FSCA decisions – to have their sentences “reconsidered”. These hearings are scheduled for Monday 28 July, and one active group for the pensioners is encouraging those who were fleeced to attend the public hearing.
“Your presence matters. Public attendance shows collective impact, reinforces accountability, and ensures transparency as this process unfolds,” posted one person on Facebook.
Regardless of the outcome, the FSCA said in its report this month that it’s “actively supporting the [police] and [prosecutions authority], sharing evidence and findings to aid in potential criminal prosecution”.
New tools
Should the pensioners lose everything – as those close to the case now fear is likely – their only comfort may be if those who’re responsible face jail time.
This case also throws the spotlight on the trustees of the N-e-FG funds, who evidently ignored the red flags until it was too late. Those trustees were excoriated by Pension Fund Adjudicator Muvhango Lukhaimane in a ruling last year for ignoring complaints about the missing money. The failure to “timeously respond in respect of complaints by such persons is a failure to uphold their fiduciary responsibilities”.
Still, had regulators intervened earlier, it might’ve been possible to salvage at least some of the R470m.
Speaking at the launch of its regulatory report this month, FSCA commissioner Unathi Kamlana said the watchdog is turning to new tools to help it act earlier in cases such as this, as well as the number of online scams aimed at fleecing consumers of their money.
“The strategic intent here is to begin to deploy advanced digital tools and analytics to detect misconduct earlier, where we are able to, to respond faster and more efficiently,” he said.
A surge in unethical behaviour underscores the need for urgency. Last year, the FSCA opened 767 new cases, a 59% increase, the majority related to unregistered financial services or insurance businesses.
The statistics in themselves don’t suggest a regulator resting on its laurels. Last year, it debarred 131 individuals (down from 156 the previous year), withdrew 382 licences (five times the 75 of the prior year), finalised 633 investigations (up from 418), and issued 107 public warnings (slightly up from 104) against dubious investment schemes.
The FSCA might be speeding up its enforcement, but is this rapid enough in a new digital era where scammers have also become more efficient?
