The Financial Planning Institute (FPI) has been plunged into a crisis of credibility, with the organisation facing two separate probes.
The FPI is the only body offering regulatory examinations to financial service practitioners.
Chairperson Ntai Phoofolo said that CEO Godfrey Nti was placed on special leave on June 4, after allegations of misappropriation of funds were received. “We explained to him that it was because of the allegations and there would be an investigation while he was on the special leave,” he said.
Asked how much exactly Nti was accused of misappropriating, Phoofolo would only say, “There’s a quantum we have in mind, having looked at what has been transpiring, but I can’t verify that until the investigation is done.”
He said that an internal memo about Nti’s special leave was circulated, without stating reasons. The memo, which was published on social media, stated that FPI chief operations officer, Stephanie Pillay would be taking over in the meantime.
Another allegation that has been aired on social media is that the FPI had breached its procurement process to use a digital company that did not have tax clearance or a tax number and that Pillay leaked confidential quotation information to the service provider so that the company quoted lower as part of the three-quote procurement system.
Pillay denied any improprieties against her, including that she personally knew the service provider.
Phoofolo said there was no evidence that he was privy to the allegations made on social media.
There were also allegations related to Pillay’s qualifications and how she was hired.
“We wanted to be clear about these allegations. The hiring of executives is something we leave to the executives to handle; as a board we are not involved. Stephanie called me and said she has never claimed to have an MBA and our human resources backed that,” he said, adding that he had not been aware of these allegations until they appeared on social media.
“Even so, an MBA was not a requirement of her position; obviously it was a contributing factor that she was busy with an MBA.” He was comfortable that the correct process was followed when hiring Pillay.
He also said all processes were above board relating to procurement of a digital agency and he has personally been assured that it is compliant and there was no irregularity.
Phoofolo said the independent investigation into allegations against Nti was being conducted by audit, tax and business advisory services firm Mkiva Inc, while the investigation into regulatory examinations fraud was being conducted by the Financial Services Conduct Authority (FSCA).
He explained that the second investigation related to the FPI examination body – a key part of the institute’s mandate – for which three employees were suspended on June 13, was due to allegations of examination fraud.
The other key aspect of the organisation’s mandate is professional facilitator certification and that, according to Phoofolo, was not under any scrutiny. “That investigation is led by the FSCA and three people have already been suspended,” Phoofolo said.
He pointed out that the examination body investigation was the second one in recent years. “There were issues before and we sorted them out but some people found another way to bypass the measures we put in place and this investigation is about that,” he said.
Following the allegations and subsequent investigation, the FSCA suspended the regulatory examinations at the FPI key individuals, financial advisers and brokers.
The FPI conducts an average of 2 000 examinations per month.
“Current and future exams will now be delivered by exam body Moonstone until further notice. Nobody who has written the exam in the past will be affected by this development, except for those who are implicated in the alleged irregularities.
"There will be no disruptions to the dates or the venues of the examinations. Moonstone will communicate directly with all candidates regarding any details pertaining to the exams. The FSCA is conducting an investigation into the matter to establish the full extent of the allegations,” read a statement issued at the time by the FSCA.
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