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Non-Bank Financial Regulatory Authority - Enforcement Of Financial Services Laws (Ss 77-81)

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[Ch4608s77]77.     Enforceable undertakings

            (1) The Regulatory Authority may accept a written undertaking from a person in connection with a matter in relation to which the Regulatory Authority has a function under a financial services law.

            (2) The person may withdraw or vary the undertaking at any time, but only with the Regulatory Authority's consent.

            (3) If the Regulatory Authority considers that the person has breached the undertaking, the Regulatory Authority may apply to the High Court for an order in terms of subsection (4).

            (4) If the High Court is satisfied that the person has breached the undertaking, the court may make all or any of the following orders-

     (a)     an order directing the person to comply with the undertaking;

     (b)     an order directing the person to do a specified act, or refrain from doing a specified act, for one or more of the following purposes-

           (i)       to remedy the effects of the breach; or

          (ii)       to compensate persons who have suffered loss because of the breach; or

          (iii)       to ensure that the person does not commit further breaches of the undertaking or of a financial services law;

     (c)     any other order that the court considers appropriate.

            (5) The Regulatory Authority shall make a copy of the undertaking available to any person who asks for it.

            (6) The Regulatory Authority shall delete from the copy information that the person who gave the undertaking has asked not to be released, but only if the Regulatory Authority is satisfied that the information-

     (a)     is confidential information that has a commercial value that would be diminished if it were to be released generally;

     (b)     should not be disclosed because it would be against the public interest to do so; or

     (c)     consists of personal details of an individual.

            (7) If information has been deleted from a copy of an undertaking in terms of subsection (5), the copy shall include a note stating that the information has been deleted.

[Ch4608s78]78.     Compensation for breaches of financial services laws

            (1) A person who suffers loss as a consequence of a contravention of a financial services law by another person (in this section called a "claimant") may recover the amount of the loss by action in a court against-

     (a)     the other person; and

     (b)     any person who was knowingly involved in the contravention.

            (2) The Regulatory Authority may institute an action of a kind mentioned in subsection (1) on behalf of one or more claimants (in this section referred to as "representative action") if in its opinion it is proper to do so.

            (3) In a representative action, the court may make any appropriate order for the conduct of the action, including orders-

     (a)     for advertising the institution of the action;

     (b)     for the identification of claimants; and

     (c)     in respect of claimants who do not wish to pursue their claims through the action.

            (4) If-

     (a)     the Regulatory Authority institutes a representative action in respect of a loss suffered by a claimant; and

     (b)     the claimant, either before or after the representative action is instituted but before it is determined, institutes an action in terms of this section in respect of the same loss,

the claimant is not entitled to recover in the representative action, and the court may make any appropriate order for the conduct of the relevant actions.

            (5) The Regulatory Authority has the conduct of a representative action to the exclusion of the claimants concerned, and may withdraw, abandon or compromise the action, but an agreement or compromise of the action is subject to the approval of the court.

            (6) In a representative action, if the court orders the payment of compensation, it may, in addition, if the court thinks fit, order a defendant to pay-

     (a)     a penalty for punitive purposes not exceeding ten times the amount of the profit or gain that may have accrued to the defendant by the contravention, and

     (b)     interest on any amount ordered to be paid.

            (7) A judgment in a representative action binds all claimants other than-

     (a)     those that the court has by order excluded from the action (in terms of subsection (3) (c) or otherwise); and

     (b)     claimants mentioned in subsection (4).

            (8) Any amount recovered by the Regulatory Authority in a representative action shall be deposited into a specially designated account established by the Regulatory Authority with the Bank of Botswana, and thereupon-

     (a)     the Regulatory Authority is, as a first charge against the account, entitled to reimbursement of all expenses reasonably incurred in bringing the representative action and in administering the distributions made in terms of this subsection;

     (b)     the Regulatory Authority shall take reasonable steps to identify claimants and determine the amount of their losses in connection with the contravention, including publishing the order of the court; and

     (c)     the balance of the amount recovered, after making provision for expenses mentioned in paragraph (a), ("distributable balance") shall be distributed among the claimants so that each claimant is paid the amount worked out using the formula-

amount of the claimant's loss


x distributable balance

total amount of all claimants' losses

 

 

            (9) A person knowingly involved in the contravention concerned is not entitled to a distribution in terms of subsection (8).

            (10) Distributions may be paid in stages.

            (11) The surplus of the distributable balance not paid at the end of three years after the first payment in terms of subsection (8) becomes funds of the Regulatory Authority.

[Ch4608s79]79.     Administrative penalties

            (1) If the Regulatory Authority is satisfied on reasonable grounds that a person has contravened a financial services law for which a civil penalty is to be imposed by the Regulatory Authority, the Regulatory Authority may give the person a notice doing one or more of the following-

     (a)     giving the person a written warning;

     (b)     directing the person to do a specified act, or refrain from doing a specified act, for one or more of the following purposes-

           (i)       to remedy the effects of the contravention;

          (ii)       to compensate persons who have suffered loss because of the contravention;

          (iii)       to ensure that the person does not commit further contraventions of financial services laws;

     (c)     imposing a civil penalty as stipulated in the provision contravened.

            (2) Without limiting subsection (1) (b), a direction may require the establishment of compliance programs, corrective advertising or (in the case of a direction to a non-bank financial institution) changes in the management of the institution.

            (3) Before taking action in terms of subsection (1), the Regulatory Authority shall give the person written notice of the proposed action, specifying the grounds for it and the facts supporting those grounds, and allowing 21 days after the notice is given for the person to ask for a hearing on the matter.

            (4) If the person requests a hearing on the matter, the Regulatory Authority shall hold a hearing before taking the action, and such hearing shall be held in private unless the person consents to the hearing being held in public.

            (5) A person to whom a notice in terms of subsection (1) has been given who fails or refuses to comply with the direction commits an offence and on conviction is liable to a fine not exceeding P50,000 or to imprisonment for a term not exceeding five years, or to both.

            (6) A civil penalty imposed under this Act is recoverable as a fine imposed by a court under section 303 (1) to (4) (inclusive) of the Criminal Procedure and Evidence Act Cap. 08:02, and an affidavit sworn by a member or employee of the Regulatory Authority is sufficient proof of the lawful imposition of the monetary penalty to enable a court to issue a warrant under that section, but no warrant is to be issued until any review under Part IX in relation to the matter has been disposed of or the time for applying for such a review has expired.

[Ch4608s80]80.     Powers of High Court

            (1) Where a person is engaged, or proposes to engage, in conduct in contravention of a financial services law, the High Court may, on application by the Regulatory Authority or a person authorised by the Regulatory Authority, make orders for the purposes of enforcing the financial services law.

            (2) Without limiting subsection (1), an order may direct the person to do a specified act, or refrain from doing a specified act, for one or more of the following purposes-

     (a)     to remedy the effects of the contravention;

     (b)     to preserve the assets of a relevant financial institution;

     (c)     to compensate persons who have suffered loss because of the contravention;

     (d)     to ensure that the person does not commit further contraventions of financial services laws.

            (3) The court may make an interim order pending the determination of an application, but the Regulatory Authority is not to be required, as a condition of the making of an interim order, to give an undertaking as to damages.

            (4) The power of the court under this section may be exercised-

     (a)     whether or not it appears to the court that the person intends to engage again, or to continue to engage, in conduct of that kind; and

     (b)     whether or not the person has previously engaged in conduct of that kind.

            (5) This section is in addition to any other power of the High Court.

[Ch4608s81]81.     Exemptions and modifications of financial services laws for non-bank financial institutions

            (1) The Regulatory Authority may, by notice in the Gazette-

     (a)     exempt a non-bank financial institution wholly or partly, as specified in the notice, from a financial services law; or

     (b)     declare that a financial services law applies in relation to a non-bank financial institution as modified in the declaration.

            (2) An exemption or declaration may-

     (a)     apply generally or to a specified case or class of cases; or

     (b)     apply unconditionally or subject to specified conditions.