5.3 Authority Remedies if Practices Continue

5.3 Authority Remedies if Practices Continue

Quick Answer: If an FSP or person continues a practice after it has been declared undesirable, the Authority may direct rectification/reinstatement of loss or damage arising from the practice (section 34(5)), require compliance within a set period commonly taught as 60 days (section 34(6)), and pursue offences under section 36 for failing to stop or failing to rectify. Broader remedies include directives, licence suspension/withdrawal, court-related relief, and other Twin Peaks enforcement tools — without needing you to invent unpublished fine schedules for every case.

Section 5.2 explained how a practice becomes undesirable. This section answers the RE5 criterion: explain the reparation measures available to the Authority if a provider/representative continues with undesirable business practices.

The statutory ladder after declaration

Think of a ladder of intensity. The Authority does not have to jump straight to the top, but RE5 expects you to know each rung exists.

You should be able to describe rungs 3–7 as reparation / remedial measures when the practice continues.

Section 34(5) — rectify or reinstate

Section 34(5) themes: where a provider, on or after the date of publication of the declaration notice, carries on the business practice in contravention of the stop, the Authority may direct that provider to rectify or reinstate, to the Authority’s satisfaction, anything caused by or arising out of carrying on the practice.

Plain-language teaching points:

• Rectify means fix the mess — reverse unlawful loadings, correct client records, stop residual automated processes, unwind unfair outcomes where possible.
• Reinstate (as taught in RE materials) points to restoring the client’s position as far as the direction requires — for example putting a client back into a pre-switch position where the banned practice drove an unfair replacement.
• The standard is to the satisfaction of the Authority, not to the satisfaction of the sales manager.
• The direction is a formal regulatory command, not a coaching tip.

What representatives actually do under a rectification direction

Representatives rarely “own” the legal response, but they often execute it:

1. Produce call notes, advice records and client lists linked to the banned practice.
2. Contact clients as instructed (scripts approved by compliance/KI).
3. Stop all residual use of the method while remediation runs.
4. Do not destroy records — obstruction themes aggravate enforcement.
5. Cooperate with compliance officer monitoring and any FSCA information requests.

Section 34(6) — the 60-day time limit

This one is in the statute, not in study folklore. Section 34(6) provides that an authorised FSP directed under section 34(5) to rectify anything must do so within 60 days after such direction is issued.

Why the exam cares:

• 60 days is an express statutory period, so it is fair game for a direct knowledge question.
• Failure to rectify within the directed period feeds section 36 offence exposure for non-compliance with section 34(6).
• “We were busy with year-end” is not a statutory excuse you should rely on in an exam answer.

If a direction sets a different formal period, obey the direction — but for RE5 recall, associate rectification after undesirable-practice continuation with the 60-day teaching figure.

Section 36 linkage — when reparation fails

If the FSP/person:

• continues the practice after declaration (s 34(4)), or
• fails to complete required rectification in time (s 34(6)),

then section 36 themes make that conduct an offence (details in section 5.4). Reparation measures and criminal/offence measures are stacked, not alternatives that cancel each other.

Statutory maximum penalties under section 36 as amended are taught in modern RE5 materials as a fine of up to R10 million and/or imprisonment of up to 10 years (or both). Do not invent case-specific fine amounts the exam has not given you; know the offence categories and that serious maxima exist.

Directives more broadly (section 38C themes)

Beyond section 34 rectification directions, the Act empowers the Authority to issue directives to persons to whom FAIS applies in order to ensure compliance or prevent contravention.

Directive themes for RE5:

• May apply generally or to a particular person.
• Takes effect on the date determined in the directive.
• Where issued to protect the general public, publication on the official website and other accessible media is required so the public can reliably access it.
• Failure to comply with a directive can support section 9 licence action (failure to comply with a directive is a listed suspension/withdrawal ground in modern section 9 lists) and other enforcement.

So if undesirable practices continue, the Authority is not limited to section 34(5) wording alone — it can use the wider directive toolkit.

Licence action as a reparative / protective measure

Continuing a banned practice is a form of material non-compliance. Under section 9, the Authority may suspend or withdraw authorisation where grounds such as the following are met (themes):

• fit and proper failure;
• material failure to comply with the Act;
• failure to comply with a directive;
• failure to comply with licence conditions/restrictions;
• other listed grounds (including unpaid levies/penalties in applicable versions).

For clients, licence suspension/withdrawal is a protective measure: it stops an FSP that will not obey a practice ban from continuing to operate as authorised. For representatives, it means the platform on which you act may disappear — your personal duty is still to stop the practice and not to migrate it to another unauthorised channel.

Court-related and further remedies (high level)

Study notes also teach that the Authority may, when satisfied that a person has contravened or is likely to contravene the Act, approach a court for orders that can include themes such as:

• restraining continued or future contraventions;
• requiring remedial steps to rectify consequences, including client prejudice;
• compensation for losses suffered by others because of the contravention (as the court determines);
• punitive amounts, interest and costs as the court may determine in appropriate proceedings.

You do not need to litigate like an advocate on RE5. You need to know that reparation is not limited to a polite letter — civil court powers and regulatory powers reinforce each other.

Twin Peaks / FSR Act architecture also supports administrative enforcement tools in the broader market-conduct system. Exam answers should stay anchored to FAIS sections 34, 36, 9 and directive themes unless the question introduces FSR-specific wording.

Debarment and internal discipline (person-level reparation)

If a representative is the person who continues the undesirable practice:

Reparation is therefore both client-facing (fix the harm) and system-facing (remove the method and, if needed, the person).

Worked scenarios

Scenario A — Continued banned fee: After declaration, Firm A’s system still adds the banned loading for three weeks. The Authority directs rectification of all affected policies within 60 days.
Correct firm response: Identify all affected clients, reverse or remediate the loading to the Authority’s satisfaction, file proof, and disable the system rule.
Rep role: Provide complete client files; do not offer “quiet discounts” that hide the issue.

Scenario B — Missed 60-day deadline: The firm ignores the direction.
Consequence themes: Section 36 offence exposure for failure to comply with section 34(6); possible section 9 licence action; possible court and administrative measures.

Scenario C — Rogue rep: One representative secretly keeps using the banned script.
Consequence themes: Firm must stop and remediate; the rep faces debarment risk for honesty/integrity and for conduct that defeats the Act’s objects; managers who knew and ignored also face accountability.

Scenario D — Partial cosmetic fix: The firm renames the banned fee but keeps the same client debit.
Analysis: Rebadging is not rectification “to the satisfaction of the Authority.” Substance over labels.

What “reparation measures” means in a one-line exam answer

If a stem asks for reparation measures when undesirable practices continue, a high-scoring cluster is:

1. Direction to rectify/reinstate consequences of the practice (s 34(5));
2. Compliance within the directed period (s 34(6) / 60-day theme);
3. Offence prosecution exposure (s 36);
4. Directives, licence suspension/withdrawal (s 9), and possible court orders;
5. Debarment of individuals who persist.

Do not invent a unique rand amount for every hypothetical firm. Use statutory offence maxima only when the question is about section 36 penalties, and never invent unpublished “typical FSCA settlements.”

RE5 exam tips

• Memorise stop → rectify (34(5)) → 60 days (34(6)) → offence (36).
• Separate declaration process (section 5.2) from remedies for continuation (this section).
• Representatives execute remediation; they do not negotiate away Gazette bans.
• Link continued practices to licence risk and debarment, not only to “a fine someday.”