New head of FSCA investigations is seeking for proactive policy

Last year South Africa started to adopt the “Twin Peaks” approach in the financial sector and abandon the “super-regulator” with replacing FBS by the new regulatory body FSCA. While the FBS was regulating the financial sector and the prudential compliance of the providers of financial services with the new approach these two activities are separated. While the FSCA is taking care of the financial sector and Forex brokerages in South Africa, the separation of the Prudential Authority will give it more power to prevent the abuse to the new division.

The newly appointed head of the division Brandon Topham is seeking for more proactive policy and actions towards the companies that could potentially be involved in wrongdoing. As Topham explained, previously, another division of the regulatory body was instructing investigators to look into something. Now investigators will have the authority to monitor and investigate the sector without having to wait for the approval. Another significant change that was brought in the division is the increase of the investigative team members. According to Topham in the old FSB, the number of the department was smaller as it was considered as the support service for FSB.  Now it is an independent body with approximately 60 members, which is twice as more as it was previously. The head of the department says the changes emphasize the importance of being proactive and not just reactive.

Success case of the new department

Brandon Topham stated that the changes will make the department able to make their own investigations and be more efficient when it comes to enforcement actions.

The recent case is supporting the statement of the newly appointed head of the division. The regulator received a complaint against a licensed representative in Cullinan, Dian Goosen. The complaint stated that he was misappropriating the funds of the customers. The FSCA was able to act within just a week after receiving the complaint, the regulator conducted a search and seizure operation at his premises.

Regarding this case, Topham stated that the reaction to such complaints and finalizing the case cannot always happen this quick. However, the regulator should always act quickly when the safety of the investors is at risk. He also emphasized the need for proper communication with the public. Previously the regulator would only make a public announcement only after it was closed and all the matters relating to it were finalized.

Currently, FSCA is working on thirteen cases, without the changes, the regulator would not have communicated the progress of any of the cases until all 13 were not finalized. Now it is publicly known that three resilient cases on inside trading are now closed and the fourth one about the market and price manipulations – where the FSCA investigation division could not find anything wrong. Topham stated that all of such cases will be publicly announced if the community is under the risk. At the same time, according to him, it is important to clear the name of the company investigated if there was not found anything wrong.

Cooperation with the NPA

Topham also wants the FSCA and the National Prosecuting Authority (NPA) to cooperate together. As the said, there were cases when the investigation was over, and the potential criminal activity was identified, but it took a long time for the case to go to court or there was no criminal conviction obtained.  As the FSCA and the NPA have a mutual interest in preventing fraud and illegal activities in the financial sector these to bodies should work together closely for more efficiency.  As the FSCA does not have the power to institute criminal prosecutors itself it is important that it cooperates with NPA where this is warranted. Brandon Topham emphasized that as a head of the department he wants South African community to see that people or companies breaking the law will have to face the consequences.