Discovery Life fined for paying sign-on bonuses the day after they were banned
FSB orders insurer to pay R2.5m because of incentives for financial advisers
The Financial Services Board (FSB) has fined Discovery Life R2.5m for awarding sign-on bonuses to four financial advisers one day after new rules came into effect prohibiting this practice. The conflict-of-interest rules prohibit financial service providers (FSPs) from offering financial rewards to advisers in order to win business from them. Financial advisers could be wrongly incentivised to move client policies to a new FSP or give preference to a product supplier in order to secure sign-on bonuses, even when this might not be in the best interests of their clients. Discovery Life offered sign-on bonuses to four financial advisers within Regal Financial Services prior to December 4 2014 but issued their employment contracts on December 5 — one day after section 3A came into operation. "It must be noted that while the paperwork in respect of these advisers was concluded post the publication of the regulations, the negotiations and process predated the deadline," a Discovery repres...
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