FSCA pulls the plug on House of Monopoly

The Financial Sector Conduct Authority (FSCA) issued a warning last week that people should not invest money with or take financial advice from House of Monopoly, a private company based in Benoni. The FSCA says House of Monopoly is not authorised in terms of the Financial Advisory and Intermediary Services (Fais) Act to render such services.

Moneyweb reported on the suspicious high returns that House of Monopoly offered investors on its website moneymakesmoney.co.za in October, at which stage the FSCA said it had not investigated the entity as yet and had not received any complaints at the time.

Read: When high returns raise suspicions

Thursday’s announcement by the FSCA went further than the usual standard warning issued to alert investors of unregistered financial services firms, adding that the financial services watchdog “suspects that House of Monopoly may be conducting unregistered financial services and falsely operating as a bank by taking deposits from the general public”.

“House of Monopoly is also not registered as a bank in terms of the Banks Act No 94 of 1990,” said the FSCA.

The SA Reserve Bank oversees compliance with the Banks Act and is responsible for investigating any entity that is seen to be taking deposits without registering as a deposit-taking institution.

Jurisdiction

House of Monopoly is owned by Toka Tibor, who told Moneyweb in October that he does not fall under the jurisdiction of the FSCA as he does not give financial advice.

He indicated that House of Monopoly deals in cryptocurrencies, which are as yet not covered by legislation in South Africa. At the time he said he had confirmation in the form of many e-mails between himself and the attorneys of the FSCA that he didn’t fall in the category of needing an FSB (Financial Services Board, forerunner of the FSCA) number.

But it looks like he was mistaken, given the FSCA investigation into his dealings.

The moneymakesmoney.co.za website was still operational days after the FSCA warned investors about House of Monopoly. It promises a return of 20% per month on deposits made for a period of one year.

A table shows that investors will receive a total of R12 000 for every R5 000 they invest – beating the website’s own claim that investors can double their money.

The promises of exceptionally high returns and the lack of information on how these returns are generated should create immediate suspicions among those looking for investment opportunities. Both the FSCA and the Reserve Bank often repeat the age-old warning of “if it looks too good to be true, it probably is”.

The FSCA says people should always check that an entity or individual is registered with the FSCA to provide financial advisory and intermediary services and what category of advice the entity is registered to provide.

Types of advice

“There are instances where persons are registered to provide basic advisory services for a low-risk product and then offer services of a far more complex and risky nature. The FSCA reminds consumers who wish to conduct financial services with an institution or person to check beforehand with the FSCA whether such institution or person is authorised to render financial services,” are warnings included in just about every statement issued by the FSCA.

Last week, the FSCA also warned the public against doing any financial services business with Afrikan Financial Services (Pty) Ltd as it is no longer authorised to render such services.

Afrikan was previously licensed by the FSCA (FSP 48238), but had its licence withdrawn in November for contravening certain sections of the Fais Act in furnishing advice in respect of deposits and rendering intermediary services in relation to a long-term policy without being duly authorised, says the FSCA.

Afrikan was not registered or authorised to sell short-term or long-term insurance products, which it continued to do. It was fined R2.5 million and the FSCA further barred two persons involved in Afrikan – Mbalenhle Khuzwayo and Buhlebenkosi Nala – from providing or being involved in providing financial advice for 10 years.

* A few weeks ago, the FSCA also promised an investigation into the events that gave rise to a family taking the body of a deceased family member to an Old Mutual office when problems cropped up about the payment of a claim. It warned Old Mutual clients not to act emotionally following public calls for people to cancel policies, reminding them that it is often costly to cancel an existing policy and begin a new one.