The Financial Services Tribunal (FST) has again drawn attention to the distinction between the processes that fall under the Labour Relations Act and the FAIS Act, stating that a CCMA settlement agreement does not invalidate a debarment.
Capitec Bank debarred a former intermediary, “SG”, in March this year for non-compliance with the Fit and Proper Requirements of honesty and integrity and/or material non-compliance with section 13(2)(a) of the FAIS Act.
She was employed as a service consultant in June 2015, and in March 2019 Capitec registered her as a representative to provide scripted intermediary services.
SG was one of 12 employees implicated in a debit order switch manipulation scheme between 1 January 2022 and 31 October 2023.
Acting on an anonymous tip-off, the bank’s Forensic Services Department initiated an investigation in 2022 into allegations that employees had captured external account numbers not belonging to clients, with the intention of increasing the number of debit order switches to qualify for Branch Team Awards.
The forensic report alleged SG was responsible for three fraudulent switches performed in May, July, and August 2022.
SG attended a disciplinary inquiry in May 2023, where she was found guilty of the alleged misconduct and subsequently summarily dismissed.
SG referred an unfair dismissal dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA). The dispute was settled in terms of a settlement agreement in July.
The parties agreed that SG would not be listed on the banks’ Register of Employees Dishonesty System (REDS) for the transgression that led to her dismissal. The termination of her employment would be recorded as resignation, and this would be reflected in her certificate of service.
In August, Capitec notified SG that it intended to debar her. The notice was sent by post to SG’s last-known residential address.
SG did not respond to the notice.
Capitec’s Department Panel decided to debar SG in October. The panel’s decision was also posted to SG’s residential address.
SG was subsequently employed by Metropolitan, which informed her in February this year that she had been debarred. This resulted in SG’s legal representatives asking Capitec for the reasons and grounds for her debarment. The statement of reasons was provided on 7 March, and SG filed her reconsideration application on 19 March.
Settlement agreement not relevant
SG’s reconsideration application did not challenge the merits or the facts pertaining to the grounds and reasons for her debarment. Instead, she said Capitec had committed procedural irregularities.
One of her submissions was that the settlement agreement meant the findings of the disciplinary hearing no longer applied at the time of the debarment process. According to the agreement, she would resign without admitting guilt, settling all outstanding disputes. Furthermore, Capitec had agreed not to place her on REDS and to retract the dismissal sanction and replace it with her resignation.
SG said the proceedings leading to her dismissal were pro non scripto (“as though it had not been written”). The debarment process should have considered the matter afresh because the facts cited by the disciplinary chairperson were no longer valid or relevant.
The Tribunal said these contentions were without merit.
First, the settlement agreement pertained to employment-related disputes governed by the Labour Relations Act, whereas debarment is regulated by inter alia the FAIS Act. The settlement agreement did not include an undertaking by Capitec not to debar SG.
Second, section 14(1) of the FAIS Act mandates debarment when a representative no longer meets the Fit and Proper Requirements or breaches the provisions of the FAIS Act materially. Once an FSP has established that a representative no longer meets the requirements of the FAIS Act, it is legally obliged to commence debarment proceedings and must debar the representative. Failure to comply exposes the FSP to sanctions.
Third, the agreement not to list SG on REDS was separate to the debarment process. REDS, which is managed by the Banking Association South Africa, helps to screen prospective employees but does not absolve Capitec of its statutory duty to debar SG.
Proof of service not required
SG also submitted that Capitec did not notify her of its intention to debar her. She denied receiving the notice of intention to debar or the debarment decision. The debarment reasons did not state when the alleged notice to debar was sent to her or how it was sent. Furthermore, they did not indicate when she received the notice.
The Tribunal referred to section 14(2)(b) of the FAIS Act, which state it is sufficient for an FSP to deliver the documents or information required in terms of section 14(3) to a person’s last-known email, physical business, or residential address. The Act does not require proof of service.
The FST accepted Capitec’s explanation that it could provide proof of service because the notification was sent to SG via ordinary mail.
It also noted that the residential address indicated on SG’s reconsideration application was the same address to which Capitec sent the notice of intention to debar, so it was “improbable” that she was unaware of the intention to debar her.
The Tribunal rejected SG’s other submissions that she had not been properly notified of the reasons and grounds for her debarment and that she had not been afforded an opportunity to present her case.
The FST found no reason to deviate from Capitec’s decision and dismissed SG’s reconsideration application.
