Who May Challenge An FSCA Decision? Practical Lessons On Locus Standi From Banxso Case

Can shareholders, directors, or key persons step into the ring when the regulator strikes at a company — or has the Tribunal finally closed that door?

A recent decision of the Financial Services Tribunal raises a pointed question for regulated entities and individuals alike: who, in law, is entitled to approach the Tribunal to challenge regulatory decisions taken by the Financial Sector Conduct Authority (FSCA)? In legal terms, this question turns on locus standi — a concept that refers to whether a person has the recognised legal right to bring a matter before a court or tribunal. Put simply, not everyone who feels the impact of a decision is entitled to challenge it. The law requires that the person bringing the case must be directly and legally affected by the decision, rather than experiencing only indirect or knock-on consequences.

In H A Sekler and Others v FSCA and Banxso (Pty) Ltd v FSCA, the Tribunal dismissed two consolidated reconsideration applications on the basis that none of the Applicants had locus standi. The ruling reinforces the narrow meaning of a "person aggrieved" under the Financial Sector Regulation Act (FSR Act) and clarifies the impact of liquidation on standing.

Background

The matters arose from the FSCA's final decision, taken on 4 July 2025, to withdraw the financial services provider (FSP) licence of Banxso (Pty) Ltd in terms of section 9(4) of the Financial Advisory and Intermediary Services Act 37 of 2002. Banxso's licence had previously been provisionally withdrawn in October 2024. Banxso did not seek a suspension or reconsideration of that provisional decision.

In August 2025, Banxso was placed under provisional liquidation by the High Court. Shortly thereafter, two reconsideration applications were filed simultaneously before the Tribunal: one in Banxso's name, and the other by four individuals, including Banxso's sole shareholder and key persons. Both applications sought identical relief — namely, the setting aside of the FSCA's decision to withdraw Banxso's licence and a remittal of the matter to the FSCA for reconsideration.

Rather than filing the full record, the FSCA raised a preliminary challenge, contending that neither Banxso nor the individual applicants had standing to pursue the applications.

Banxso's application: effect of provisional liquidation

In considering Banxso's own application, the Tribunal held that a company under provisional liquidation lacks the capacity to litigate in relation to its assets, including its FSP licence. Once liquidation intervenes, control over the company's assets vests in the provisional liquidator, who acts under the authority of the Master and in the interests of creditors.

Neither the company itself, nor its shareholders or directors, may act in its name to protect or recover assets unless authorised to do so through the liquidator or by court order. The fact that the provisional liquidator was aware of the proceedings but had not joined them did not assist Banxso. A party without standing cannot acquire locus by attempting to join another, nor does non-joinder cure an absence of standing.

On this basis alone, Banxso's reconsideration application was dismissed.

The individual applicants: meaning of "person aggrieved"

The Tribunal then turned to the application brought by the four individuals. They contended that they were "persons aggrieved" because:

1. The withdrawal of Banxso's licence deprived the company of a valuable asset, indirectly affecting the shareholder; and
2. The factual findings underpinning the withdrawal decision exposed them to potential debarment and significant administrative penalties, thereby affecting their right to trade and their reputations.

Central to the Tribunal's analysis was section 230(1)(a) of the FSR Act, which permits an application for reconsideration only by a "person aggrieved" by a decision. Drawing on recent High Court authority and established Appellate Division jurisprudence, the Tribunal reaffirmed that a person is not "aggrieved" merely because they have an indirect financial, commercial, or reputational interest in the outcome of a decision.

The first applicant's position as sole shareholder did not confer standing. A shareholder's interest in the assets or regulatory status of a company is indirect and financial in nature and does not amount to a legal interest sufficient to ground locus standi.

As for the remaining applicants, the Tribunal held that they were not bound by the findings made in the Banxso licence withdrawal decision. Any legal consequences they faced — including debarment and the imposition of administrative penalties — arose from a separate investigative and decision-making process conducted by the FSCA. Their rights would be determined in those proceedings, not in the licence withdrawal decision directed at Banxso.

The Tribunal emphasised that allowing persons with only indirect interests to seek reconsideration would open the door to applications by shareholders, creditors, or other affected parties whenever a regulator acts against a company — a result plainly not intended by the legislature.

Key takeaways

This decision offers several important lessons for regulated entities and individuals operating in the financial services sector:

1. Reconsideration before the Tribunal is tightly confined to those who are legally, not merely commercially or reputationally, affected by a decision.
2. A company under provisional liquidation cannot independently pursue reconsideration proceedings relating to its assets; such steps lie within the authority of the liquidator.
3. Shareholders and key persons do not acquire standing to challenge regulatory decisions taken against a company simply because those decisions may have adverse knock-on effects for them.
4. Challenges to a potential or parallel FSCA enforcement action must be raised in the particular proceedings where the parties' legal rights are substantively adjudicated.

The ruling underscores the Tribunal's consistent approach to locus standi and serves as a cautionary reminder that reconsideration proceedings cannot be used to launch indirect or premature challenges to regulatory decisions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.