South African business hit with R11.5 million fine

South Africa’s financial regulator has debarred the directors of Sanda Funeral Home and imposed a penalty of R11.5 million.

The Financial Sector Conduct Authority (FSCA) announced in a press release on Friday, 21 February, that it had received complaints about Sanda Funeral Home and its directors.

The complaints alleged that the business and its directors, Zisanda Sanda and Sandile Michael Sanda, were issuing life insurance policies without the company being licensed as an insurer.

In addition, they were rendering financial services without being authorised as a financial service provider.

The FSCA investigated and found that they were indeed issuing life insurance policies without the necessary authorisations.

The investigated parties conducted their business from multiple branches in the Eastern Cape and Western Cape. 

The company had branches in Kariega, Sada, Langa, Kwanobuhle, Whittlesea, Port Elizabeth, Motherwell and Cape Town.

As part of its modus operandi, the business offered funeral insurance policies to the public.

Policyholders paid monthly premiums to Sanda Funeral Home, and in return, the company provided funeral services as insurance benefits upon the insured’s death.

As a result of the contraventions, the FSCA imposed a penalty of R11.5 million on Sanda Funeral Home and debarred Zisanda for 20 years and Sandile for 10 years. 

The directors are accordingly prohibited from –

• Providing or being involved in the provision of financial services
• Acting as a key person of a financial institution
• Providing specified financial services to a financial institution, whether under outsourcing arrangements or otherwise

The FSCA emphasised the risk associated with conducting financial services and insurance business with entities that may be operating without the necessary licenses.

The regulator urged members of the public to always verify that an entity or individual is authorised by the FSCA to provide financial products and services, including giving recommendations about how to invest.

In addition, it urged the public to very what category of advice the person is registered to provide.

This is because there are instances where companies or people are registered to provide basic advice for a low-risk product and then offer advice on far more complex and risky products.