FSCA suspends Ithala SOC Limited’s licence

Pretoria - The Financial Sector Conduct Authority (“FSCA”) has announced that it has suspended the licence that had been held by Ithala SOC Limited (“Ithala”) (Financial Services Provider Number: 17139) in terms of section 9(1), read with section 9(2) of the Financial Advisory and Intermediary Services Act, No.37 of 2002 (“FAIS Act”).

The Pretoria-based regulator said that the suspension is effective from 26 July 2024 and will remain in place until Ithala meets the conditions for the lifting of the suspension of its license.

"Ithala was authorised in terms of the FAIS Act, to act as a category 1 Financial Services Provider (“FSP”). Through ongoing supervision, the FSCA identified that Ithala does not meet the financial soundness requirements specified in section 46(1) and sections 48(1) and (2) of the Determination of Fit and Proper Requirements 2017 ('Board Notice 194 of 2017').

"It is imperative that FSPs comply with the requirements of the FAIS Act, which are aimed at protecting the interests of financial customers. Solvency is a critical element for the ongoing viability of any FSP, and compliance with the solvency requirements is of utmost importance. This is relevant to the financial customer protection objective of the Authority."

The FSCA explained that solvency requirements are imposed inter alia to ensure that an FSP is able to meet unforeseen liquidity needs and to accomplish, where necessary, the orderly resolution of the business of the FSP without prejudicing the interests of clients or other stakeholders.

"The suspension of the licence means that Ithala is prohibited from concluding any new business as envisaged by the FAIS Act, and must, in consultation with the clients and product suppliers concerned, take reasonable steps to ensure that any outstanding business is transferred to another authorised FSP. Under the suspension, Ithala is permitted to continue providing financial services for existing business," it said.

Following the suspension decision, Ithala made an application to the Financial Services Tribunal (“Tribunal”) for the reconsideration of the FSCA’s decision and simultaneously applied for the interim suspension of the decision pending the outcome of the reconsideration application.

However, the Tribunal dismissed the interim application on 22 August 2024. A hearing date for the reconsideration application before the Tribunal has not yet been determined.