Zulu King Misuzulu kaZwelithini says the Financial Sector Conduct Authority (FSCA)’s decision to suspend Ithala’s banking licence will jeopardise thousands of KwaZulu-Natal residents.
The FSCA said on Friday it suspended the beleaguered KwaZulu-Natal development bank’s licence as it failed to meet financial soundness requirements, saying solvency was a critical element for the viability of any financial services provider (FSP).
“It is imperative FSPs comply with the requirements of the FAIS Act, which are aimed at protecting the interests of financial customers. Solvency is a critical element for the ongoing viability of any FSP, and compliance with the solvency requirements is of utmost importance. This is relevant to the financial customer protection objective of the authority.
“Solvency requirements are imposed inter alia to ensure that an FSP is able to meet unforeseen liquidity needs and to accomplish, where necessary, the orderly resolution of the business of the FSP without prejudicing the interests of clients or other stakeholders.”
The FSCA said the suspension meant Ithala is prohibited from concluding any new business and is permitted to continue providing financial services for existing business.
Ithala turned to the Financial Services Tribunal for reconsideration of the FSCA’s decision and simultaneously applied for the interim suspension of the decision pending this, however the tribunal dismissed the interim application on August 22.
A hearing date for the reconsideration application has not yet been determined.
The suspension is effective from July 26 until Ithala meets the conditions for the lifting of the suspension of its licence.