South Africa’s Financial Sector Conduct Authority has flagged FSCA unlawful referrals and the misuse of clients’ personal information as growing risks within the financial services sector. The warning comes in the regulator’s latest Regulatory Actions Report, which found that some businesses describe themselves as referral operations while actually providing regulated financial services without a licence.
FSCA divisional executive of enforcement Gerhard van Deventer said unlawful referrals have become a recurring concern, with providers sometimes appointing unlicensed “runners” who are neither registered representatives nor tested on industry knowledge. He also flagged advisors who leave one employer for another and take clients’ personal information with them, noting that one such case led to a 12-year debarment.
According to the FSCA, referral arrangements become problematic when a referrer goes beyond simply introducing clients to a licensed provider, becoming involved in the investment process, explaining products or assisting with applications without authorisation. In one case study, the FSCA imposed a R1 million administrative penalty on a company and debarred its representative for 10 years for exceeding these limits; a challenge to the sanctions was dismissed by the Financial Services Tribunal.
On FSCA client data abuse, the regulator said it has seen advisors copy client portfolio information and transfer it to personal email accounts or share it with prospective employers after leaving a firm. Such conduct raises concerns around confidentiality, data protection, client privacy and “churning,” and may cast doubt on whether an advisor still meets fit-and-proper requirements under the Financial Advisory and Intermediary Services Act. In one cited case, an advisor who unlawfully copied and distributed confidential client data after resigning was debarred for 12 years, a decision upheld by the Financial Services Tribunal.
The focus on unlawful referrals and client information forms part of a broader FSCA enforcement strategy. Its report, covering April 2025 to March 2026, shows 678 investigations finalised, nearly R2.9 billion in administrative penalties imposed, 68 individuals debarred and 140 public warnings issued.
Van Deventer said the regulator’s approach extends beyond financial penalties. “We don’t just penalise, we are much more focused on protecting the public,” he said, adding that in cases involving fraud and dishonesty, the FSCA works closely with criminal investigating and prosecuting authorities. Regulatory action against data misuse has drawn attention internationally too, including the European Union’s recent decision to fine Google €890 million over separate regulatory violations.
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