South Africa Financial Sector Conduct Authority imposes ZAR 197 million penalty on Medbond Insurance and Jacobus Meyer and debars Meyer for 30 years

The South Africa Financial Sector Conduct Authority (FSCA) has imposed an administrative penalty of ZAR 197 million on Medbond Insurance Brokers (Pty) Ltd and Mr Jacobus Meyer, jointly and severally, and levied further penalties of ZAR 5 million each on Medbond Markets (Pty) Ltd, Medbond Fund Managers (Pty) Ltd and Masjamplan (Pty) Ltd. The FSCA also debarred Meyer for 30 years and Mr Frederick Andries Jacobus van Heerden for four years, prohibiting them from providing financial services, acting as key persons of a financial institution, or providing financial services to a financial institution under outsourcing arrangements or otherwise. An FSCA investigation found that Medbond Insurance advised clients to invest in a Group Variable Annuity at Lombard International Life that was not available for investment, and bank account analysis indicated client funds were not invested but instead misappropriated. Medbond Markets acted as a discretionary manager in relation to the same purported investment, despite the product not being available, and allowed client deposits to be received by unauthorised entities within the Medbond Group. Medbond Fund Managers and Masjamplan were found to have rendered intermediary services while not authorised to do so; Meyer was found to have gained control of and misappropriated clients’ funds, while van Heerden was found to have caused or facilitated contraventions and to no longer meet the fit and proper requirements, though the FSCA cited mitigating factors including his cooperation and that he was not complicit in the misappropriation. The FSCA has decided to report the matter to the South African Police Service and to share all evidence obtained during the investigation, and will provide active assistance if requested.