Livestock Wealth: financial regulator warns public to be cautious

The Financial Services Conduct Authority is warning the public to be cautious when dealing with Livestock Wealth Financial Services (Pty) Ltd and Livestock Wealth (Pty) Ltd, saying it has come to its attention that Livestock Wealth may be unlawfully offering members of the public investment into livestock and/or agricultural product(s) and profitable returns upon maturity.

In a statement the Financial Services Authority (FSCA) points out that Livestock Wealth is not authorised to render any financial services in terms of the Financial Advisory and Intermediary Services Act.

“It is of concern that Livestock Wealth has also been using Livestock FS’ financial service provider number on Livestock Wealth’s website. As a result, the FSCA has commenced an investigation into Livestock Wealth,” the FSCA says.

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Only authorised for insurance and pension benefits

According to the FSCA, Livestock FS is a licensed financial service provider (FSP). It, however, is also under investigation due to Livestock Wealth using its FSP number.

The FSCA emphasised that the investigations have not been completed and it has made no findings to date.

In addition, the FSCA points out that anyone offering financial services in South Africa must be licensed by the FSCA and have the correct category of licence. “While Livestock FS is authorised to provide advice and intermediary services relating to insurance products and pension benefits, it is not authorised to provide any financial services relating to deposits or investments.”

CEO does not agree with financial regulator

However, Livestock Wealth CEO, Ntuthuko Shezi, does not agree with the FSCA. “Livestock Wealth (PTY) LTD is a technology platform that enables anyone to be a farmer. Since 2015, we have enabled anyone to own agricultural assets such as cows and trees as they grow on a farm under the expert care of a farmer.”

He says Livestock Wealth Financial Services was registered in 2020 to provide insurance services to its partner farmers. “We also wanted to set up a cell captive, an insured kitty, which would insure the farmer should there be a disturbance in their operations while not affecting the customer’s expectation of a timely return.

“We obtained an FSP license in October 2021 for Livestock Wealth Financial Services (PTY) which is wholly owned by Livestock Wealth. Due to the strength of the Livestock Wealth brand, they both have the same trading name.”

Shezi says Livestock Wealth (PTY) LTD is not registered with the FSCA, but Livestock Financial Services is.

“Until recently, we were under the impression that Livestock Wealth was operating legally following correspondence from the FSCA in 2015 indicating that we did not need a licence to sell agricultural assets, after we proactively approached them in an attempt to register.”

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Livestock Wealth says it’s cooperating with FSCA

He says following the FSCA’s statement this week the company is cooperating fully with the regulator to get the reasons for its concerns and ensure that Livestock Wealth is operating within the letter of the law.

“Is it our view that it is authorised to offer financial services through Livestock Wealth Financial Services? In this respect, it is unclear to me the nature of the relationship between Livestock Wealth and Livestock Wealth Financial Services,” Shezi says.

How Livestock Wealth operates

According to the company’s website, it offers the opportunity to buy and sell ‘real farm assets’. “Our Crowdfarming platform connects you with approved farmers who already have cows, macadamia trees and other assets. You buy the asset (livestock or plant-based) from the farmer, through Livestock Wealth.

“The asset grows in the farmer’s care. The farmer buys back the asset once it has fully grown at harvest. You, the investor, make a profit from the sale.”

The website goes on to state that Livestock Wealth provides a service to investors who may not have the skills nor the time to farm for themselves. “We enlist the qualified farmers to take care of our investors assets and work towards our projected returns. Farmers have the skills to grow assets but they may need more working capital.

“Banks and conventional funding methods do not accept growing crops as collateral. Livestock Wealth finds investors for farmers, helping them to access capital whilst their livestock grows.”

You can pay for the asset with your credit card, electronic funds transfer or direct bank transfer. Should something happen to your asset, it will be replaced at no extra charge.

Livestock Wealth says it is trustworthy

As an answer to the question if you can trust Livestock Wealth, the website says “it is important to fully understand any investment or purchase that you make. We encourage all our potential investors to do their research and make financially responsible choices”.

According to the website, “Livestock Wealth is a registered credit provider with the National Credit Regulator (NCRCP8126). Livestock Wealth is also regulated as a registered agricultural producer agent with the Agriculture Producer Agents’ Council (Reg No. 155). Furthermore, Livestock Wealth is registered with SAMAC (Macadamias South Africa NPC).”

However, if you want to visit your asset, the website says for safety and security reasons visits are limited to coordinated investor events occurring on an annual basis, to which investors are invited. The website also indicates that more than R100 million has been invested by global investors in five continents.

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Warning from the FSCA

Members of the public should always check that an entity or individual is authorised by the FSCA to provide financial products and services, including giving recommendations about how to invest. It is also important to know what category of advice the person is registered to provide, as there are instances where companies or people are registered to provide basic advice for a low-risk product and then offer advice on far more complex and risky products.

Members of the public who want to use the financial services of an institution or person can check their authorisation before any purchase or investment is made, by calling the FSCA’s toll-free number: 0800 110 443 or do an online search for an authorised financial institution by license category here.  You can also search online for a financial institution that is an authorised FSP in terms of the FAIS Act here.