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FSCA halts regulatory exams at the FPI

Investigation into allegations of irregularities underway.
Exams will go ahead through regulatory exam body Moonstone. Picture: Chris Ratcliffe/Bloomberg News

The Financial Planning Institute (FPI) will not be running any regulatory exams for key individuals, financial advisers and brokers until further notice. The Financial Sector Conduct Authority (FSCA, previously the FSB) announced on Thursday that it had instructed the FPI to discontinue its delivery of these exams due to concerns around the integrity of the process.

The regulator was moved to act after it was informed that irregularities may be taking place at the FPI. An investigation is already underway.

“We became aware of irregularities as a result of external people coming to us and warning us that particular things were happening,” said the FSCA’s Caroline da Silva. “In all three of the cases we were made aware of, the modus operandi was exactly the same.”

Suspected fraud

The FSCA is not able at this stage to disclose what took place as it is still under investigation, but Da Silva explained that on the back of what they have already uncovered, she felt it necessary to suspend examinations at the FPI.

“We were required to do some internal analysis with the FPI to look at if there really was a gap in the system that allowed this to happen, and we found that there was,” she noted. “To ensure that we mitigate that risk and that we don’t allow this gap in the process to be used for any further exams, we’ve suspended the examinations. The evidence that we have indicates that internal FPI staff are involved.”

The FSCA’s actions come just weeks after three former FPI employees were arrested for their role in manipulating examination results between 2006 and 2013. That had resulted in a large number of individuals being barred by the regulator for bribing those FPI employees into giving them better results.

Read: FSB debars individuals who bribed their way to a qualification

Da Silva however made it clear that this is not a continuation of that problem.

“It wasn’t the same people or the same fraud,” she said. “The previous issue was addressed, and those loopholes were closed. The previous modus operandi was a manipulation of results. The exams were written, and then someone within the FPI manipulated the results to make it look like people had passed. This is completely different.”

Investigation will cover everyone involved

Questions will nevertheless be raised about how two such similar issues could arise within the same organisation within the space of a few years.

“I’ve suspended the exams so that we can determine is it a governance issue, or is it bad luck, and how many examinations have been affected,” Da Silva said. “I can’t anticipate that outcome.”

She did however make it clear that nobody who has already written the examinations needs to be concerned, unless they were involved in the fraud.

“We will be looking as far as possible to find every single person involved,” said Da Silva. “We won’t just investigate FPI staff, but everyone who took advantage of that process.”

The FPI itself confirmed that it was concerned that a similar incident may have taken place, and it was cooperating fully with the investigation.

“We are committed to ensuring the ethical standards of the industry, and we support the FSCA in its investigation,” said FPI spokesperson Tsholofelo Dihutso. “Where there were alleged irregularities, we want to find out what really happened.”

Dihutso added that they wanted to make it clear that the FPI’s membership and certification programme was separate from the regulatory examinations, and this has not been affected at all.

“We want to assure our membership base that these are two distinct aspects,” she said.

Examinations will go ahead with Moonstone

For those who were scheduled to write regulatory exams with the FPI, the FSCA also insisted that there will be no interruptions. Regulatory exam body Moonstone will now take responsibility for all examinations.

“I want to give a very clear message that for those who are still to write, there should be no interruption,” said Da Silva. “Everything has been co-ordinated – we know who they are and where they are writing. Moonstone will just take over.”

The head of regulatory examinations at Moonstone, Sheila Olckers, offered similar reassurance.

“Nobody needs to worry,” she said. “We have been running exams since 2010 and are able to handle very high volumes. The exams will go ahead as planned.”

Moonstone is currently importing all the FPI registrations onto its systems. All of those who were scheduled to write under the FPI should have already received notifications that their exam is being moved to Moonstone, and they will receive a further notification from Moonstone to confirm their booking and directions to the venue where they will write.

Olckers also made it clear that there is no difference between the exams managed by the FPI or Moonstone. Candidates should therefore not worry about their preparation.

“The FSCA is the owner of the examinations and the question book,” she pointed out. “The two bodies pull their questions from exactly the same exam book, so there is absolutely no difference.”

Anyone who has any questions about their exams may contact the Moonstone call centre on 021 883 8000.

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The fact that there are corrupt individuals who bribed officials to let them pass the exams is alarming. Those corrupt people are currently employed by companies that I may have my investments in. It’s worrying.

The FPI is not directly involved in any companies so the only people who should concern you are those who have bribed their way into passing exams falsely – not sure if that’s what you meant.

No, there will always be corrupt people. The fact that there are officials, employed by the FPI who is the “South African Qualifications Authority” for the industry, is much much worse.

It goes to show that the people who are employed there are just there for the salary and don’t have the integrity it takes to uphold the vision the company has. This to me is worse. The advisor who you allow to advise you on your portfolio can be eliminated in a day by appointing a new one, but the FPi is suppose to be the top ranking body that is supposed to be faultless and flawless…… or so they want us all to believe.

and then there are those with morw than 20 years experiance who tried more than once to pass the exams…exams that had nothing to do with investment planning but 100% about the law…all originally a money making scheme

Well, well, well – so, the arrogant FPI who always behave like demigods, have been caught-out – not ONCE, but (it appears) repeatedly. So much for their “holier than thou” attitude 🙁

This simply vindicates my decision to cancel my membership a number of years ago after experiencing anything BUT professional service in my dealings with them. I experienced a number of questionable responses to queries that no fee-paying member should have found acceptable.

I wonder if they’ll simply increase their membership fees to try to make up for the huge financial losses. . . I’ll be watching this matter with interest.

Also considered cancelling membership – expensive fees for very little in return. low quality online resources(e.g. online material for investments is very weak [I work in an asset management team]).

FPI are good at doing a large amount of presentations and webinars for CPD points ..but you pay for everything (over above membership fee).

Sad because financial planning industry crucially needs a trustworthy body that gives credibility to the industry (particularly to help clients separate ‘good’ advisers from ‘bad’).

Ja nê!!!! Ek bly maar stil………..Humbleness brings you everywhere, arrogance will make you fall.

I reported a CFP /CA qualified financial advisor who was fraudulently using my FSB name and number to the FPI some years ago. Their reply: it wasn’t that serious, and took no steps against her……
Was a warning sign to me years ago that something is rotten at FPI.
Its a money making racket only interested in the fees they can suck from the financial industry.

Haha FPI ‘’I met a lot of hard-boiled eggs in my life, but you – you are twenty minutes!

Ace in the Hole (US 1951)

Methinks it was about time for the ‘’FPI’’s’’ holier than thou attitude and conduct to be exposed.
I did the RE (at Moonstone) exam some years and to this day believe that its ‘’all about nothing’’ – most definitely a waste of time….and a money making racket – that moved in line with the rest of the ‘’State Capture and Government corruption’’ around.
My view is that this ‘’one size fits all ‘’ type of regulatory exams/courses should be totally revamped to be industry/sales orientated – for specific principles, failing which they might just as well introduce the ‘’pass one pass all ‘’ principle that a plethora of people in this country seems to favour!

South Africa has the “best-regulated financial market in the world” with the worst enforcement capabilities in the world. A positive plus a negative of the same magnitude equals zero. So, we have nothing. 🙂

Industries and organisations in the past have had an arm wrestle between technical people and the marketing (a.k.a. spin and smoke/ mirrors) people. Now compliance/regulatory is the “third force” As they get more power the financial industry is subjected to more nonsense like twin peaks/FAIS. The best thing to do would be to shred all paper related to the above regulations (and FAIS exams) and use them as feedstock to an Eskom power plant to generate a few milliwatts.

Is it any wonder we are junk in the eyes of the first world and getting worse.

End of comments.

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