A person who contravenes the General Code of Conduct is not necessarily no longer fit and proper to act as a representative, the Financial Services Tribunal (FST) has found.
The Tribunal’s decision, handed down this week, does not state when the FSP, Mzingisi Brokers, debarred the applicant, “ND”, or when she submitted her reconsideration application.
The debarment was the result of a client lodging two complaints against ND.
The client said he asked for a funeral policy with a premium of about R100 a month, but the premium was R350 a month. The client also alleged ND asked him to sign a blank form, which she completed with the information he had given her.
“There is a dispute of fact relating to the first complaint, and the respondent did not and could not make any finding against the applicant on that ground,” the FST’s decision states.
ND did not dispute the second allegation, and she did not on the papers filed with the Tribunal engage with the issue, although it had been raised by the respondent
In its papers filed with the Tribunal, Mzingisi Brokers said the client provided an affidavit confirming that ND got him to sign a blank application form in contravention of section 7(2) of the General Code of Conduct for Authorised Financial Services Providers and Representatives.
This section states: “No provider may in the course of the rendering of a financial service request any client to sign any written or printed form or document unless all details required to be inserted thereon by the client or on behalf of the client have already been inserted.”
The Tribunal said Mzingisi Brokers was clearly correct when it held that ND had contravened the Code. “But that does not mean per se that the applicant is no longer a fit and proper person to act as a financial services representative.”
The FST said the correct enquiry should have been whether ND contravened the Code “in a material manner”, referring to section 14(1)(a)(iv) of the FAIS Act.
Mzingisi Brokers also justified the debarment on the ground that ND had previously been debarred. The Tribunal said this was “an irrelevant consideration”.
The FST found that the circumstances did not justify ND’s debarment. It set aside the debarment, saying it did not make sense to remit the matter to the FSP for reconsideration.
It would seem that getting a client to sign a blank form, while obviously not a very serious offence like theft or fraud, is also probably not a trivial offence either. I think it could be regarded as fairly serious, considering the potential for abuse by the representative/ advisor possibly filling in details to his/her own benefit (eg higher commission) rather than according to the wishes of the client, which is something that seems to have probably occurred in this case (unless the client lied).
ND did not dispute the second allegation, and she did not on the papers filed with the Tribunal engage with the issue, although it had been raised by the respondent
The above, from the post, is in reference to the blank form. Surely there was some form of action taken against this?