The Financial Sector Conduct Authority (FSCA) published an update on a 23 March 2026 judgment of the Gauteng Division of the High Court, which interdicted Fusion Guarantees (Pty) Ltd from issuing construction guarantees and confirmed that such guarantees can fall within the Insurance Act 18 of 2017 despite the issuer being registered under the National Credit Act 34 of 2005. The Court held that whether a guarantee is subject to the Insurance Act depends on the facts of each guarantee when assessed against the Act’s definition of insurance business. The applications by Fusion and a financial services provider, Elasah Risk Consultants (Pty) Ltd, seeking declaratory relief that the guarantees were credit agreements rather than insurance were dismissed. Elasah was found to lack standing because it arranges guarantees rather than issuing them, and Fusion’s argument that the guarantees were regulated only under the National Credit Act was rejected. The Court found the guarantees displayed the essential characteristics of a non-life insurance policy, including premiums (regardless of terminology), an undertaking to meet insurance obligations, indemnification of loss suffered by the beneficiary, and dependence on an uncertain event such as contractor default; it also reaffirmed earlier precedents including Becker (2017) and Fern Finance (2022). Orders granted on the FSCA’s counter-application included declarations that Fusion’s guarantees (and those referenced by Elasah) are non-life insurance policies, a finding that Fusion was conducting unlicensed insurance business in breach of section 5(1) of the Insurance Act, an interdict against further issuance, and an adverse costs order against Fusion and Elasah. The Court indicated that its reasons for dismissal would follow. The FSCA linked the outcome to its 9 June 2025 warning to contractors, state entities and municipalities to exercise caution when accepting guarantees from unlicensed entities, including checking FSCA requirements and verifying the issuer’s licensing status.
South Africa Financial Sector Conduct Authority 2026-04-09
South Africa Financial Sector Conduct Authority obtains High Court order declaring Fusion construction guarantees as non-life insurance and prohibiting further issuance
The Financial Sector Conduct Authority reported that the Gauteng Division of the High Court interdicted Fusion Guarantees (Pty) Ltd from issuing construction guarantees and confirmed such guarantees can fall within the Insurance Act 18 of 2017, even where the issuer is registered under the National Credit Act 34 of 2005. The Court declared Fusion’s guarantees (and those referenced by Elasah Risk Consultants (Pty) Ltd) to be non-life insurance policies, found Fusion had conducted unlicensed insurance business in breach of section 5(1), and granted an interdict and adverse costs order against Fusion and Elasah.