Optivest Health Services (Pty) Ltd v Council for Medical Schemes and Others (396/2023) [2024] ZASCA 64; [2024] 3 All SA 107 (SCA); 2024 (6) SA 106 (SCA) (30 April 2024)

FLYNOTES: LEGISLATION – Medical Schemes Act – Powers of Council and Registrar – Powers of Council to investigate alleged non-compliance with provisions of Act by broker accredited by Council – Section 44(4) of Medical Schemes Act 131 of 1998 enabling Council to investigate conduct of broker – Performance of Council’s functions of monitoring or investigating any non-compliance with Act and regulations – Council’s conduct was lawful, procedurally fair and rationally connected to purpose of Act.

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

JUDGMENT

Reportable

Case no:396/2023

In the matter between:

OPTIVEST HEALTH SERVICES (PTY) LTD APPELLANT

and

THE COUNCIL FOR MEDICAL SCHEMES FIRST RESPONDENT

THE REGISTRAR OF THE COUNCIL

FOR MEDICAL SCHEMES SECOND

RESPONDENT

OPEN WATER ADVANCED RISK

SOLUTIONS (PTY) LTD

THIRD RESPONDENT

Neutral citation: Optivest Health Services (Pty) Ltd v The Council for Medical Schemes and Others (396/2023) [2024] ZASCA 64 (30 April 2024)

Coram: MOCUMIE ADP, WEINER and GOOSEN JJA and COPPIN and BLOEM AJJA

Heard: 5 March 2024

Delivered: This judgment was handed down electronically by circulation to the parties’ representatives by email, published on the Supreme Court of Appeal website, and released to SAFLII. The date and time for hand-down is deemed to be 11h00 on 30 April 2024.

Summary: Whether s 44(4) of the Medical Schemes Act 131 of 1998 (the Act) enables the Council and Registrar of Medical Schemes to investigate the conduct of a broker – whether the Council was obliged to utilise the mechanisms of s 47 of the Act – whether the Council’s conduct was lawful, procedurally fair and rationally connected to the purpose of the Act.

ORDER

On appeal from: Gauteng Division of the High Court, Pretoria (Nyathi J, sitting as court of first instance):

The appeal is dismissed with costs, including the costs of two counsel.

Weiner JA (Mocumie ADP, Coppin and Bloem AJJA concurring):

Introduction

[1] The appellant is Optivest Health Services (Pty) Ltd (Optivest), which is accredited as a broker by the Council for Medical Schemes (the Council) in terms of s 1,[1] read with s 65[2] of the Medical Schemes Act 131 of 1998 (the Act) and the regulations made in terms of the Act (the regulations).

[2] The first respondent is the Council. Section 3 of the Act provides for the establishment of the Council. The second respondent is the Registrar of the Council appointed in terms of s 18 of the Act. In terms of s 18(3), the Registrar shall act in accordance with the provisions of this Act and the policy and directions of the Council. (The first and second respondents will either be referred to collectively as ‘the respondents’, or individually as ‘the Registrar’ or ‘the Council’

where appropriate).

[3] The third respondent, Open Water Advanced Risk Solutions (Pty) Ltd (Open Water), is the company which was appointed by the Registrar in terms of s 44(2) of the Act, read with s 134(1)(a) of the Financial Sector Regulation Act 9 of 2017 (the FSR Act), to undertake an inspection into Optivest after a tip-off was received

from an anonymous former employee of Optivest regarding conduct that was alleged to be unlawful, which required further investigation.

[4] This appeal concerns the powers of the Council to investigate the alleged non-compliance with the provisions of the Act by a broker accredited by the Council in terms of s 65 of the Act, by way of an inspection in terms of s 44(4) of the Act, read with the relevant provisions of the FSR Act. The Gauteng Division of the High Court, Pretoria (the high court) held that it did have such power and

dismissed an application by Optivest challenging the exercise of that power with costs. This is an appeal against that order with the leave of that court.

[5] The preamble of the Act sets out its purpose as follows:

‘To consolidate the laws relating to registered medical schemes; to provide for the establishment of the Council for Medical Schemes as a juristic person; to provide for the appointment of the Registrar of Medical Schemes; to make provision for the registration and control of certain activities of medical schemes; to protect the interests of members of medical schemes; to provide for measures for the co-ordination of medical schemes; and to provide for incidental matters.’ (Emphasis added.)

[6] The issues in this appeal are whether, upon a proper construction of inter alia ss 7 and 44(4) of the Act, the respondents have the power to investigate a complaint concerning a broker, in this case, Optivest. It also involves the question as to whether the respondents were obliged to utilise the mechanisms in s 47 of the Act, by giving Optivest the opportunity to respond to the complaint before embarking on the investigation of Optivest’s activities. Related to these issues are the defences raised by Optivest that the decision by the Council to appoint Open Water to investigate Optivest was unlawful, procedurally unfair and lacked rationality.

The legislative scheme

[7] The functions of the Council are outlined in s 7 of the Act. Section 7(a) provides for the duty to protect the interests of beneficiaries at all times. Section 7(h) gives the Council the power to perform any other functions conferred on it by the Minister under the Act. Section 8(h) empowers the Council to take any appropriate steps which it deems necessary or expedient to perform its functions in accordance with the provisions of the Act. The Council is a financial sector regulator and the executive officer of the Council refers to the Registrar, whose functions include the management of the affairs of the Council (s 18(2)). The decision to investigate a Medical Scheme or ‘any person’ for non-compliance with the Act is exclusively within the powers of the Registrar in terms of the Act.

[8] Section 44(4) provides for inspections. In terms thereof:

‘The Registrar may order an inspection in terms of this section—

(a) if he or she is of the opinion that such an inspection will provide evidence of any irregularity or of non-compliance with this Act by any person; or

(b) for purposes of routine monitoring of compliance with this Act by a medical scheme or any other person.’ (Emphasis added.)

[9] Related to the powers referred to above, are those contained in ss 129(2) and (3), 134, 135, 136 and 137 of the FSR Act, which respectively provide as follows:

‘129. Application and interpretation of Chapter. –

. . .

(2) The Council for Medical Schemes may exercise powers in terms of this Chapter in respect of powers and functions set out in the Medical Schemes Act, and powers and functions granted to it in this Act.

(3) In relation to the exercise of the powers in terms of this Chapter by the Council for Medical Schemes in respect of a medical scheme, a reference in this Chapter to –

(a) a financial sector regulator or the responsible authority must be read as including a reference to the Council for Medical Schemes;

(b) the head of a financial sector regulator must be read as including a reference to the Registrar of Medical Schemes appointed in terms of section 18 of the Medical Schemes Act; >

(c) a financial sector law must be read as including a reference to regulatory instruments and to the Medical Schemes Act; and

(d) a licensed financial institution must be read as including a reference to a medical scheme registered in terms of the Medical Schemes Act or an administrator of a medical scheme approved in terms of the Medical Schemes Act.

(d) a licensed financial institution must be read as including a reference to a medical scheme registered in terms of the Medical Schemes Act or an administrator of a medical scheme approved in terms of the Medical Schemes Act.’

[70] The second modification concerns the distinction between supervisory inspections and ‘investigations’. Section 132 provides that a financial sector regulator (for which read the Council of a Medical Scheme)[46] may, upon notice, conduct a supervisory on-site inspection at the business premises of ‘a supervised entity’. The FSR Act defines a ‘supervised entity’ to include a ‘licenced financial institution’. Section 129(3)(d) specifies that for the purposes of the exercise of the powers conferred by the chapter, a licence financial institution must be taken to include a medical scheme registered in terms of the Act. The purpose of a supervisory inspection is to check compliance with a financial sector law (read with the Act)[47] for which the regulator ‘is the responsible authority’.[48]

[71] Upon a careful reading of s 44(4)(b), which concerns routine inspections, the Registrar’s power to conduct a supervisory on-site inspection can only relate to the supervised entity under its regulatory or supervisory control. In this instance, it concerns a registered medical scheme. As concerns such inspection, the repeal of the 1998 Inspection Act and re-enactment of its provisions in the FSR Act, did not bring about an extension of the powers to inspect entities which are not supervised entities in terms of the Act.

[72] The same applies in relation to s 44(4)(a). The qualification, however, is not expressed with reference to ‘supervised entity’. Section 135, which confers the power to investigate, is framed in broad terms. It states, in relevant part, that:

‘(1) A financial sector regulator may instruct an investigator appointed by it to conduct an investigation in terms of this Part in respect of any person, if the financial sector regulator—

(a) reasonably suspects that a person may have contravened, may be contravening or may be about to contravene, a financial sector law for which the financial sector regulator is the responsible authority; or . . .’

[73] The main judgment places reliance upon this broad formulation to support the conclusion that Optivest is subject to the exercise of the Registrar’s investigatory powers because it is a licenced financial services provider accredited by the Council. In my view, there are two respects in which the conclusion is incorrect. First, the broad ambit of the powers of investigation are qualified by s 129 of the FSR Act. Subsection (3) refers to the exercise of Chapter 9 powers by the Council ‘in respect of a medical scheme’. When this qualification is applied to the substitution of terms as explained in sub-paragraphs (a) to (d), it is clear that the Chapter 9 powers can only be applied in relation to a medical scheme which falls under the supervisory control of the Council. Furthermore, the qualification is entirely consonant with the overall qualification of the Council’s supervisory powers as expressed in the provisions of the Act read as a whole. Secondly, the qualifying phrase ‘in respect of a medical scheme’ expressly ensures that the modifications effected by the FSR Act do not alter the essential character of the powers conferred by the 1998 Inspection Act.

[74] Counsel for the respondents argued that the FSR Act had, in effect, broadened the regulatory powers of the Council. The argument did not, however, account for the legislative mechanism by which these changes

were said to have been introduced. If it had been intended to broaden the ambit and scope of the powers which may be exercised by the Council, then an amendment of the provisions of the Act and s 44(4), in particular, could have been expected. In this regard, this Court’s approach to the limitations of reliance upon the provisions of the Interpretation Act to support such alteration are instructive. In Spinnaker Investments (Pty) Ltd v Tongaat Group Limited, it was observed that:

‘I deem it unlikely that the Legislature would depend solely on the provisions of the Interpretation Act if there were an intention to legislate with such far reaching consequences. The words of Lord MORRIS of Borth-Y-Gest (reported in Blue Metal Industries v R.W. Dilley (1969) 3 AER 437 at 442) are apposite:

“The Interpretation Act is a drafting convenience. It is not to be expected that it would be used so as to change the character of

legislation.”

See too Floor v Davis (1979) 2 AER 677 at 681 (H.L.). I do not think that the Interpretation Act 1957 can be used to extend the ambit of the definition of “take-over

scheme” so as to fortify and lend weight to the meaning for which plaintiff contends. If that meaning had been intended, the draftsman would surely have said so.’[49]

[75] In addition, the accreditation of Optivest as a broker who is entitled to offer specific broker services in terms of the Act does not render it subject to the supervisory control of the Council in terms of the Act. ‘Broker services’ is defined by the Act to include ‘(a) the provision of service or advice in respect of the introduction or admission of members to a medical scheme; or (b) the ongoing provision of service or advice in respect of access to, or benefits or services offered by, a medical scheme’. These services are plainly advisory or intermediary services rendered in relation to a financial product.[50] Optivest was obliged to be, and was in fact, licenced as a financial services provider in terms of the FAIS Act.[51] As a matter of fact, therefore, Optivest’s conduct as a licenced financial services provider rendering advisory services, was subject to the conduct codes issued under the FAIS Act,[52] and fell under the supervisory authority of the Financial Sector Conduct Authority (the FSCA).[53]

[76] These provisions establish that the regulatory and supervisory power of the FSCA is based upon the nature of the service, and not upon the content of the service. Thus, the fact that a broker service is provided in relation to a particular type of financial product, namely the benefits offered by a medical scheme, is of no significance insofar as the control of the service is concerned. Nor, in my view, does it matter that s 65 of the Act imposes upon an accredited broker, restrictions as to fees or any other obligations. A failure to comply with such statutory obligations would render the broker concerned in breach of the conduct requirements imposed by the FAIS Act and that, in turn, would render the broker subject to regulatory sanction at the instance of the FSCA.

[77] ‘Accreditation’ in terms of the Act is not the equivalent of licencing. It serves, as the term suggests, to permit or authorise the provision of advice in relation a particular product, and no more. Accreditation does not, in my view, place the broker concerned under the supervisory control of the Council and, upon such basis,

subject to investigation by the Registrar utilising the power conferred by s 44 of the Act. To hold that accreditation places a

broker under the supervisory control of the Council, even if only in relation to compliance with s 65 of the Act, as the main

judgment does, would give rise to considerable regulatory conflict and inefficiency. This can be illustrated as follows. Assume that an accredited broker, in breach of s 65 is paid fees in excess of those which are prescribed and also receives indirect benefits for advising clients to become members of a particular medical scheme. Such conduct would entitle the Council to suspend or cancel the accreditation of the broker. The conduct would also constitute a breach of prescribed conduct rules in terms of the FAIS Act and a breach of the conditions of the licence issued to the broker. Yet, the Council would have no authority to take any action against the broker in terms of the FAIS Act. That authority rests with the FSCA. For such action to be taken, the Council would have to report the matter to the FSCA so that it, as the regulatory authority responsible for the supervision of the conduct of brokers, might act. The converse situation poses no such problems. The FSCA is entitled to investigate any conduct on the part of a broker, including possible non-compliance with the Act. The FSCA could act upon its findings. So too could the Council since the accreditation of a broker is subject to the fit and proper requirements established and regulated by the FAIS Act.

[78] The main judgment places some reliance upon the judgment of the Constitutional Court in AmaBhungane,[54] which concerned circumstances in which the existence of authority or power to act may be implied in a statute. As I understand the main judgment, it calls in aid the potential for an implied authority to investigate the conduct of a broker as an interpretative tool. It is, however, not clear upon what basis the authority is to be implied. The Constitutional Court drew a careful distinction between ancillary powers and primary powers. Both forms may be implied in consequence of the interpretive exercise of determining meaning and giving effect to statutory provisions. It is, however, necessary to determine whether the implied power derives from and is therefore ancillary to an existing conferred power, or if it is implied as a primary power by virtue of a reading of the statute as a whole.

[79] In the latter instance, the power is implied in order to render the statutory instrument effective. That was the situation in AmaBhungane where it was implied that the Minister was empowered to appoint a ‘designated judge’ despite the absence of an express

provision to that effect.

[80] In this instance, the power to conduct an investigative inspection of the affairs of an accredited broker does not meet the requirements for implying it as a primary power. The absence of an express authorisation to conduct such investigative inspection does not render the Act inoperative nor, for the reasons proffered above, does it exempt a broker from proper regulatory control and supervision.

[81] Is the power to be implied as ancillary to some other expressly conferred power? The main judgment appears to accept that it must be on the basis of the existence of the power to accredit a broker and to enforce compliance with regulation 28 of the regulations. In light of the reasoning adopted by the main judgment this issue does not arise, since the judgment accepts that the use of the phrase ‘by any other person’ in s 44(4)(a) of the Act is broad enough to expressly cover application of the section to brokers. There is therefore no need for an implied ancillary power.

[82] In any event, I am unable to agree that such power is to be implied as ancillary to the power to accredit for the reasons I have already set out. Furthermore, reliance upon regulation 28 is misplaced. In Moodley and Another v Minister of Education and Others,[55] this Court held, unequivocally, that:

‘It is not permissible to treat the Act and the regulations made thereunder as a single piece of legislation; and to use the latter as an aid to the interpretation of the former.’

[83] Still less may one use the regulations promulgated under an act as a source of primary power from which one might imply that an ancillary power has been conferred by the act. The main judgment suggests that this course is appropriate insofar as it suggests that the remedy provided by regulation 28(9) would be ineffective unless the power to conduct an investigative inspection of a broker is implied.[56] Regulation 28(9), in any event, does not confer any remedial power upon the Council. It merely provides that a broker is liable to repay fees received in consequence of unlawful conduct.[57]

[84] This brings me to the procedural challenge based upon s 47 of the Act. The language of s 47 indicates that the Council is entitled to adjudicate complaints in relation to both registered entities (medical schemes) and accredited persons (in this case Optivest as an accredited broker). The section requires that if a written complaint

is received, a copy of the complaint must be furnished to the party concerned to afford it the opportunity to respond to the complaint.

[85] The main judgment holds that the Registrar is entitled to proceed to employ the machinery of s 44(4)(a) notwithstanding the existence of s 47 and the peremptory language used in the latter section. It therefore concludes that the complaint procedure does not serve as a bar to an investigative inspection as contemplated by s 44(4)(a). In light of my conclusion that the Registrar does not have the authority or power to conduct an investigative inspection of the business or affairs of a broker, the interplay between ss 44 and 47 does not arise. I accordingly express no view on whether the existence of a s 47 complaint precludes the employment of s 44(4) to parties to whom it applies.

[86] For these reasons I would uphold the appeal on the terms indicated at the outset.

__________________

G GOOSEN

JUDGE OF APPEAL

Appearances

For the appellant: J J Meiring with P S MacKenzie and S Mathe

Instructed by: Von Lieres Cooper and Barlow, Cape Town

Hendre Conradie Inc, Bloemfontein

For the first and second respondent: R Tshetlo with Z Ngakane and S Mashiane

Instructed by: MacRobert Inc, Pretoria

Claude Reid Attorneys, Bloemfontein.

[1] Section 1 of the Act defines a broker to mean ‘a person whose business, or part thereof, entails providing broker services. . .’ ‘broker services’ are defined as: ‘(a) The provision of service or advice in respect of the introduction or admission of members to a medical scheme; or (b) The ongoing provision of service or advice in respect of access to, or benefits or services offered by, a medical scheme.’

[1] Section 1 of the Act defines a broker to mean ‘a person whose business, or part thereof, entails providing broker services. . .’

‘broker services’ are defined as:

‘(a) The provision of service or advice in respect of the introduction or admission of members to a medical scheme; or

(b) The ongoing provision of service or advice in respect of access to, or benefits or services offered by, a medical scheme.’

[2] Section 65 provides as follows: ‘(1) No person may act or offer to act as a broker unless the Council has granted accreditation to such a person on payment of such fees as may be prescribed. (2) The Minister may prescribe the amount of the compensation which, the category of brokers to whom, the conditions upon which, and any other circumstances under which, a medical scheme may compensate any broker. (3) No broker shall be compensated for providing broker services unless the Council has granted accreditation to such broker in terms of subsection (1). (4) An application for accreditation shall be made to the Council in the manner and be accompanied by such information as may be prescribed, and any other information as the Council may require. (5) A medical scheme may not directly or indirectly compensate a broker other than in terms of this section. (6) A broker may not be directly or indirectly compensated for providing broker services by any person other than — (a) a medical scheme; (b) a member or prospective member, or the employer of such member or prospective member, in respect of whom such broker services are provided; or (c) a broker employing such broker.’

[2] Section 65 provides as follows:

‘(1) No person may act or offer to act as a broker unless the Council has granted accreditation to such a person on payment of such fees as may be prescribed.

(2) The Minister may prescribe the amount of the compensation which, the category of brokers to whom, the conditions upon which, and any other circumstances under which, a medical scheme may compensate any broker.

(3) No broker shall be compensated for providing broker services unless the Council has granted accreditation to such broker in terms of subsection (1).

(4) An application for accreditation shall be made to the Council in the manner and be accompanied by such information as may be prescribed, and any other information as the Council may require.

(5) A medical scheme may not directly or indirectly compensate a broker other than in terms of this section.

(6) A broker may not be directly or indirectly compensated for providing broker services by any person other than —

(a) a medical scheme;

(b) a member or prospective member, or the employer of such member or prospective member, in respect of whom such broker services are provided; or

(c) a broker employing such broker.’

[3] Section 136 provides as follows: ‘136. Powers of investigators to question and require production of documents or other items. (1)(a) An investigator may, for the purposes of conducting an investigation, do any of the following: (i) By written notice, require any person who the investigator reasonably believes may be able to provide information relevant to the investigation to appear before the investigator, at a time and place specified in the notice, to be questioned by an investigator; (ii) by written notice, require any person who the investigator reasonably believes may be able to produce a document or item relevant to the investigation, to— (aa) produce the document or item to an investigator, at a time and place specified in the notice; or (bb) produce the document or item to an investigator, at a time and place specified in the notice, to be questioned by an investigator about the document or item; (iii) question a person who is complying with a notice in terms of subparagraph (i) or (ii)(bb); (iv) require a person being questioned as mentioned in subparagraph (i) or (ii)(bb) to make an oath or affirmation, and administer such an oath or affirmation; (v) examine, copy or make extracts from any document or item produced to an investigator as required in terms of this paragraph; (vi) take possession of, and retain, any document or item produced to an investigator as required in terms of this paragraph; and (vii) give a directive to a person present while the investigator is exercising powers in terms of this section, to facilitate the exercise of such powers. (b) An investigator who takes a document or item in terms of paragraph (a)(vi) must give the person producing it a written receipt. (c) Subject to paragraph (d), the investigator must ensure that a document or item taken in terms of paragraph (a)(vi) is returned to the person who produced it when— (i) retention of the document or item is no longer necessary to achieve the object of the investigation; or (ii) all proceedings arising out of the investigation have been finally disposed of. (d) A document or item need not be returned to the person who produced it if — (i) the document or item has been handed over to a designated authority; or (ii) it is not in the best interest of the public or any member or members of the public for the document or item to be returned. (e) A person otherwise entitled to possession of a document or item taken in terms of paragraph (a)(vi), or its authorised representative, may, during normal office hours and under the supervision of the financial sector regulator, examine, copy and make extracts from the document, or inspect the item. (2) A person being questioned in terms of this section is entitled to have a legal practitioner present at the questioning to assist the person.’ Section 137 provides as follows:

[3] Section 136 provides as follows:

‘136. Powers of investigators to question and require production of documents or other items.

(1)(a) An investigator may, for the purposes of conducting an investigation, do any of the following:

(i) By written notice, require any person who the investigator reasonably believes may be able to provide information relevant to the investigation to appear before the investigator, at a time and place specified in the notice, to be questioned by an investigator;

(ii) by written notice, require any person who the investigator reasonably believes may be able to produce a document or item relevant to the investigation, to—

(aa) produce the document or item to an investigator, at a time and place specified in the notice; or

(bb) produce the document or item to an investigator, at a time and place specified in the notice, to be questioned by an investigator about the document or item;

(iii) question a person who is complying with a notice in terms of subparagraph (i) or (ii)(bb);

(iv) require a person being questioned as mentioned in subparagraph (i) or (ii)(bb) to make an oath or affirmation, and administer such an oath or affirmation;

(v) examine, copy or make extracts from any document or item produced to an investigator as required in terms of this paragraph;

(vi) take possession of, and retain, any document or item produced to an investigator as required in terms of this paragraph; and

(vii) give a directive to a person present while the investigator is exercising powers in terms of this section, to facilitate the exercise of such powers.

(b) An investigator who takes a document or item in terms of paragraph (a)(vi) must give the person producing it a written receipt.

(c) Subject to paragraph (d), the investigator must ensure that a document or item taken in terms of paragraph (a)(vi) is returned to the person who produced it when—

(i) retention of the document or item is no longer necessary to achieve the object of the investigation; or

(ii) all proceedings arising out of the investigation have been finally disposed of.

(d) A document or item need not be returned to the person who produced it if —

(i) the document or item has been handed over to a designated authority; or

(ii) it is not in the best interest of the public or any member or members of the public for the document or item to be returned.

(e) A person otherwise entitled to possession of a document or item taken in terms of paragraph (a)(vi), or its authorised representative, may, during normal office hours and under the supervision of the financial sector regulator, examine, copy and make extracts from the document, or inspect the item.

(2) A person being questioned in terms of this section is entitled to have a legal practitioner present at the questioning to assist the person.’

Section 137 provides as follows:

‘137. Powers of investigators to enter and search premises. – (1) An investigator may, for the purposes of conducting an investigation, do any of the following (a) Enter any premises . . . (ii) without prior consent and without prior notice to any person— . . . (bb) with the prior authority of the head of a financial sector regulator or a senior staff member of the financial sector regulator delegated to perform the function, if the head of a financial sector regulator or senior staff member on reasonable grounds believes that — . . . (CC) it is necessary to enter the premises to conduct the investigation and search the premises as referred to in paragraph (b) or (c), and to do anything contemplated in subsection (6); (b) if the investigation is one referred to in section 135(1)(a), search the premises for evidence of a contravention of a financial sector law; or (c) if the investigation is one referred to in section 135(1)(b), search the premises pursuant to the request, subject to section 251 (6)(a) While on the premises in terms of this section, an investigator, for the purpose of conducting the investigation, has the right of access to any part of the premises and to any document or item on the premises. . .’

‘137. Powers of investigators to enter and search premises. –

(1) An investigator may, for the purposes of conducting an investigation, do any of the following

(a) Enter any premises

(ii) without prior consent and without prior notice to any person—

(bb) with the prior authority of the head of a financial sector regulator or a senior staff member of the financial sector regulator delegated to perform the function, if the head of a financial sector regulator or senior staff member on reasonable grounds believes that —

(CC) it is necessary to enter the premises to conduct the investigation and search the premises as referred to in paragraph (b) or (c), and to do anything contemplated in subsection (6);

(b) if the investigation is one referred to in section 135(1)(a), search the premises for evidence of a contravention of a financial sector law; or

(c) if the investigation is one referred to in section 135(1)(b), search the premises pursuant to the request, subject to section 251

(6)(a) While on the premises in terms of this section, an investigator, for the purpose of conducting the investigation, has the right of access to any part of the premises and to any document or item on the premises. . .’

[5]Section (44)(2) stipulates that: ‘The Registrar, or such other person authorised by him or her, shall in addition to the powers and duties conferred or imposed upon him or her by this Act, have all the powers and duties conferred or imposed upon an inspector appointed under section 2 of the Inspection of Financial Institutions Act, 1984 (Act No. 38 of 1984), as if he or she has been appointed an inspector under that Act.’

[5]Section (44)(2) stipulates that:

‘The Registrar, or such other person authorised by him or her, shall in addition to the powers and duties conferred or imposed upon him or her by this Act, have all the powers and duties conferred or imposed upon an inspector appointed under section 2 of the Inspection of Financial Institutions Act, 1984 (Act No. 38 of 1984), as if he or she has been appointed an inspector under that Act.’

[6] Bonitas Medical Fund v The Council for Medical Schemes [2016] ZASCA 154; [2016] 4 All SA 684 (SCA) paras 8-9.

[7] Ibid paras 14-15.

[8] S 44(1) of the Act provides: ‘A medical scheme shall, at the written request of the Registrar, or during an inspection of the affairs of a medical scheme, by the Registrar or such other person authorised by him or her, produce at any place where it carries on business, its books, documents and annual financial statements in order to enable the Registrar or such other person authorised by him or her to obtain any information relating to the medical scheme required in connection with the administration of this Act.’

[8] S 44(1) of the Act provides:

‘A medical scheme shall, at the written request of the Registrar, or during an inspection of the affairs of a medical scheme, by the Registrar or such other person authorised by him or her, produce at any place where it carries on business, its books, documents and annual financial statements in order to enable the Registrar or such other person authorised by him or her to obtain any information relating to the medical scheme required in connection with the administration of this Act.’

[9] Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA) para 18.

[10] Ibid paras 18-19.

[11] Cool Ideas 1186 CC v Hubbard [2014] ZACC 16; 2014 (4) SA 474 (CC); 2014 (8) BCLR 869 (CC) para 28.

[12] Medihelp Medical Scheme v Registrar For Medical Schemes and Another [2020] ZAFST 88 para 10.

[13] Op cit fn 1.

[14]Which translates to: ‘if the principal thing is prohibited or permitted, the accessory thing is likewise prohibited or permitted’.

[14]Which translates to:

‘if the principal thing is prohibited or permitted, the accessory thing is likewise prohibited or permitted’.

[15] AmaBhungane Centre for Investigative Journalism NPC and Another v Minister of Justice and Correctional Services and Others; Minister of Police v AmaBhungane Centre for Investigative Journalism NPC and Others [2021] ZACC 3; 2021 (4) BCLR 349 (CC); 2021 (3) SA 246 (CC). (Amabhungane).

[16] Ibid para 69.

[17] Ibid paras 63-67.

[18] Ibid.

[19] Section 7(a) of the Act.

[20] Section 7(h) of the Act.

[21] Op cit fn 6 and 7.

[22] Section 8(k) of the Act.

[23] Op cit fn 11 above.

[24] Bonitas para 7.

[25] Bonitas para 15.

[26] Endumeni fn 9 above.

[27] Capitec Bank Holdings Limited and Another v Coral Lagoon Investments 94 (Pty) Ltd and Others [2021] ZASCA 99; [2021] 3 All SA 647 (SCA); 2022 (1) SA 100 (SCA) para 25.

[28] Nissan SA (Pty) Limited v Commissioner for Inland Revenue [1998] ZASCA 59; [1998] 4 All SA 269 (SCA); 1998 (4) SA 860 (SCA) at 870H-I; see also Joosub Ltd v Ismail 1953 (2) SA 461 (A) at 466.

[29] The FSR Act came into operation on 1 April 2018.

[30] The Medical Schemes Amendment Act, 55 of 2001 came into operation on 1 March 2002. It is noteworthy that this Amendment Act did not amend s 44(2) and (3) to refer to the 1998 Inspection Act.

[31] Section 7(a) of the Act.

[32] Section 7(b) of the Act.

[33] Section 7(d) of the Act.

[34] Section 8(f) of the Act.

[35] Section 8(k) of the Act.

[36] The ‘business of a medical scheme’ is defined in s 1 of the Act to mean: ‘the business of undertaking, in return for a premium or contribution, the liability associated with one or more of the following

activities: (a) Providing for the obtaining of any relevant health service; (b) granting assistance in defraying expenditure incurred in connection with the rendering of any relevant health service; or (c) rendering a relevant health service, either by the medical scheme itself, or by any supplier or group of suppliers of a relevant health service or by any person, in association with or in terms of an agreement with a medical scheme.’

[36] The ‘business of a medical scheme’ is defined in s 1 of the Act to mean:

‘the business of undertaking, in return for a premium or contribution, the liability associated with one or more of the following

activities:

(a) Providing for the obtaining of any relevant health service;

(b) granting assistance in defraying expenditure incurred in connection with the rendering of any relevant health service; or

(c) rendering a relevant health service, either by the medical scheme itself, or by any supplier or group of suppliers of a relevant health service or by any person, in association with or in terms of an agreement with a medical scheme.’

[37] Section 43 provides that: ‘The Registrar may address enquiries to a medical scheme in relation to any matter connected with the business or transactions of the medical scheme, and the medical scheme shall reply in writing thereto within a period of 30 days as from the date on which the Registrar addressed the enquiry to it, or within such other period as the Registrar may specify.’

[37] Section 43 provides that:

‘The Registrar may address enquiries to a medical scheme in relation to any matter connected with the business or transactions of the medical scheme, and the medical scheme shall reply in writing thereto within a period of 30 days as from the date on which the Registrar addressed the enquiry to it, or within such other period as the Registrar may specify.’

[38] I have emphasised certain phrases which appear in the section for purposes of the discussion to follow.

[39] Bonitas para 14.

[40] Section 3 of the 1998 Inspection Act dealt with the power to inspect institutions (for which read medical scheme in light of the

definition of a financial institution contained in the Act). It reads: ‘3(1) The registrar may at any time instruct an inspector to carry out an inspection of the affairs, or any part of the affairs, of a financial institution or associated institution. (2) If the registrar has reason to believe that a person, partnership, company or trust which is not registered or approved as a financial institution, is carrying on the business of a financial institution, he or she may instruct an inspector to inspect the affairs, or any part of the affairs, of such a person, partnership, company or trust.’ Section 4 provided for the powers of the inspector in relation to institutions. Subsection (1) qualified the exercise of the powers as follows: ‘(1) In carrying out an inspection of the affairs of an institution under section 3 or 3A an inspector may—. . .’

[40] Section 3 of the 1998 Inspection Act dealt with the power to inspect institutions (for which read medical scheme in light of the

definition of a financial institution contained in the Act). It reads:

‘3(1) The registrar may at any time instruct an inspector to carry out an inspection of the affairs, or any part of the affairs, of a financial institution or associated institution.

(2) If the registrar has reason to believe that a person, partnership, company or trust which is not registered or approved as a financial institution, is carrying on the business of a financial institution, he or she may instruct an inspector to inspect the affairs, or any part of the affairs, of such a person, partnership, company or trust.’

Section 4 provided for the powers of the inspector in relation to institutions. Subsection (1) qualified the exercise of the powers as follows:

‘(1) In carrying out an inspection of the affairs of an institution under section 3 or 3A an inspector may—. . .’

[41] See para 57 and fn 30 above.

[42] The Long Title states, inter alia, that it seeks: ‘. . . to establish a system of financial regulation by establishing the Prudential Authority and the Financial Sector Conduct Authority, and conferring powers on these entities; . . . to regulate and supervise financial product providers and financial services providers; . . . to make comprehensive provision for powers to gather information and to conduct supervisory on-site inspections and investigations; [and] to provide for information sharing arrangements. . .’.

[42] The Long Title states, inter alia, that it seeks:

‘. . . to establish a system of financial regulation by establishing the Prudential Authority and the Financial Sector Conduct Authority, and conferring powers on these entities; . . . to regulate and supervise financial product providers and financial services providers; . . . to make comprehensive provision for powers to gather information and to conduct supervisory on-site inspections and investigations; [and] to provide for information sharing arrangements. . .’.

[43] Sections 32 and 56 of the FSR Act.

[44] Ex parte Glavonic 1967 (4) SA 141 (N) at 142H.

[45] Berman Brothers (Pty) Ltd v Sodastream (Pty) Ltd [1986] ZASCA 27; [1986] 2 All SA 252 (A); 1986 (3) SA 209 (A) at 240.

[46] Section 129(3)(a) of the FSR Act.

[47] Section 129(3)(c) of the FSR Act.

[48] Section 132(2)(a) of the FSR Act.

[49] Spinnaker Investments (Pty) Ltd v Tongaat Group Limited 1982 (1) SA 65 (A) at 75G-H.

[50] See the definition of the terms ‘advice’, ‘financial product’ and ‘intermediary services’ as set out in s 1 of the Financial Advisory and Intermediary Services Act 37 of 2002 (the FAIS Act).

[51] See ss 7 and 8 of the FAIS Act.

[52] See s 15 of the FAIS Act. Section 16, significantly, provides that the published codes must comply with certain principles. One of those is to encapsulate the requirement that the service provider ‘comply with all applicable statutory or common law requirements applicable to the conduct of business’ (s 16(1)(e)).

[53] See s 58(1)(a), read with s 5 and Schedule 2 of the FAIS Act. The effect is that the FSCA is the regulatory authority responsible for supervisory control of supervised entities which fall under the ambit of the FAIS Act.

[54] AmaBhungane para 65.

[55] Moodley and Others v Minister of Education and Culture, House of Delegates and Another [1989] ZASCA 45; 1989 (3) SA 221 (AD) at 233E.

[56] See paras 38(e) and 40 of the main judgment.

[57] Regulation 28 (9) reads as follows: ‘Any person who has paid a broker compensation where there has been a material misrepresentation, or where the payment is made consequent to unlawful conduct by the broker, is entitled to the full return of all the money paid in consequence of such material misrepresentation or unlawful conduct.’

[57] Regulation 28 (9) reads as follows:

‘Any person who has paid a broker compensation where there has been a material misrepresentation, or where the payment is made consequent to unlawful conduct by the broker, is entitled to the full return of all the money paid in consequence of such material misrepresentation or unlawful conduct.’