The Financial Services Tribunal (FST) has ordered the FSCA to pay half the legal costs of an insurance broker’s reconsideration application, saying his debarment was “irregular and unlawful”.
The Tribunal found the Authority based its decision to debar a Mr Shuping on “unverified and hearsay evidence”. This faulty decision also resulted in the Authority’s decision to withdraw the licence of Shuping Brokers, of which Shuping is the sole proprietor and key individual.
Shuping’s first name is not stated in the FST’s decision or in the recording of the hearing.
The decision states the Authority’s case against Shuping was based on findings by 1Life Insurance, with which Shuping Brokers had an intermediary services agreement.
In addition, the FSCA alleged that Shuping Brokers had contravened sections 19(1) and (2) of the FAIS Act because it did not submit financial statements for the 2016 to 2021 financial years.
1Life informed the Authority that Shuping submitted three falsified funeral policy applications. The FSCA accepted the insurer’s findings and initiated debarment proceedings against Shuping.
His initial response to the FSCA, in December 2022, was “a bare denial” of the allegations. Shuping subsequently submitted statements by the three policyholders. Their statements confirmed they had taken out the policies with 1Life and contradicted the version that 1Life had presented to the FSCA.
The Authority rejected Shuping’s version. It said the three statements appeared to have been written by the same person and the signatures on the statements differed materially from the signatures on the application forms.
Meanwhile, back in September 2022, the FSCA informed Shuping Brokers of its intention to suspend its licence because of the non-submission of the annual financial statements. It requested reasons by 6 October 2022 why the brokerage’s authorisation should not be withdrawn. But no further action was taken until Shuping’s debarment the following year.
On 26 June 2023, the FSCA debarred Shuping for five years on the grounds that he did not meet the Fit and Proper Requirements of honesty, integrity, and good-standing. Furthermore, he had contravened sections 2 and 3(1)(d) of the General Code of Conduct.
Two days later, it withdrew Shuping Brokers’ authorisation in terms of section 9(1) read with section 9(2) of the FAIS Act.
Witnesses are called
Shuping represented himself at the reconsideration hearing in February this year. He told the FST panel he paid R20 000 in legal fees to prepare for the application, and his attorney had to withdraw because he could not afford to incur further fees.
He submitted that the FSCA had not followed a fair process and his right to be heard had been denied.
Furthermore, he said the FSCA relied exclusively on the forensic report received from 1Life that identified the three policies as fraudulent. It rejected his evidence and the statements signed by the three policyholders without contacting them.
He came to know of the 1Life forensic report only when he received the notice of intention to debar. 1Life did not provide him with a copy of the report and did not afford him an opportunity to respond to the allegations of fraud.
The Tribunal, following a proposal by the FSCA in its heads of argument, directed the policyholders to appear before the Tribunal.
Two policyholders, Nada Tshotyana and Maria Shuping, gave evidence. Shuping is married to Tshotyana’s aunt, and Maria Shuping is also related to the applicant.
Both witnesses testified that Shuping assisted them to take out the funeral policies, and the policy application process had been done via a tablet. They confirmed that they had signed the statements submitted to the FSCA.
The Tribunal said Tshotyana and Maria Shuping were credible witnesses.
‘Unverified and hearsay evidence’
The Tribunal found that the FSCA decided to debar Shuping based solely on the information and forensic report it received from 1Life. It did not conduct its own investigation to verify the allegations and findings by 1Life that Shuping had essentially committed fraud.
“The FSCA made the decision to debar Mr Shuping on unverified and hearsay evidence.”
Worse, it made this decision despite the policyholders’ statements that materially contradicted the FSCA’s conclusion that Shuping had signed them up fraudulently.
Confronted with the material disputes, the Authority should have resolved the conflicting versions by hearing from the policyholders.
“Had the FSCA conducted its own investigation, it would have been placed in possession of the true facts surrounding the conclusion of the policies and that the policies were completely above board. Yet, it took the drastic and far-reaching decision to debar Mr Shuping to his prejudice. The FSCA’s decision to debar Mr Shuping was irregular and unlawful.”
The FST said the Authority’s decision to withdraw Shuping Brokers’ licence was based primarily on the findings made against Shuping, its KI. Shuping’s debarment, on the grounds that he no longer met the honesty and integrity requirements, triggered the licence withdrawal. That finding was wrong, and so the primary basis for withdrawing the brokerage’s authorisation must also fail.
The Tribunal upheld the application. It set aside the debarment and the licence withdrawal and remitted the decisions to the FSCA for further consideration.
No response to the exemption application
Regarding the non-submission of the financial statements, Shuping submitted he applied for an exemption in 2015 and referred the Tribunal to an application made on the prescribed form.
The FSCA failed to respond to his application. When he did not hear from the FSCA, Shuping assumed he had been exempted and did not submit his financial statements for the 2016 financial year-end and subsequent years.
Counsel for the FSCA conceded that the Authority had not responded to Shuping’s exemption application, nor had it engaged with him about his failure to submit the annual financial statements. Counsel could not provide the Tribunal with an explanation for this.
Counsel also conceded that the FSCA had confronted Shuping with this contravention only when the notice of intention to debar was issued. But Counsel said the Authority was empowered to withdraw Shuping Brokers’ licence solely because it did not submit the financial statements.
The FST said the facts surrounding Shuping Brokers’ failure to submit the financial statements were not in dispute.
The correct legal position is that an exemption application must be submitted annually. However, the Tribunal said the FSCA’s silence and failure to address the issue clearly led Shuping to believe that his application was granted, and nothing further was required of him. The Authority could not seek to rely on its own failure to prejudice Shuping further by withdrawing the licence for this reason.
Costs order
The Tribunal said Shuping suffered great prejudice because of his debarment and the withdrawal of Shuping Brokers’ licence. He was unable to earn an income and conduct his business.
“The manner in which the FSCA debarred Mr Shuping was not only deficient but caused Mr Shuping significant harm. The circumstances, in our view, constitute exceptional circumstances and warrant a costs order against the FSCA.”
It ordered the Authority to pay 50% of Shuping and Shuping Brokers’ legal costs associated with the reconsideration application.
Disgusting legal costs split as the very small brokerage has been financially destroyed.
His reputational feathers have been thrown to the wind, never to be recovered.
FSCA should pay him millions of rands to compensate him for their constant total incompetence.
I have approached FSCA,, explained my unlawfull treatment by Standard Bank,they told me to complete all their forms,I did so,then continued,email FSCA many proop of my late wife’s credit facility agreement contract,Wich the independent Aumbudsman OBS had ignored,aswell as standard bank,my late wife had a credit life insurance policy intact,STD bank deny this,and say it was for a different product,Wich is not true at all,as the credit facility agreement contract is watertight proof of,this is why they had ignored it..in June 2023, Beauty Mokgogloa from SBIB insurance claims,had send me 3 emails to confirm that the credit life policy was paid,when I asked them to pay my money back they simply refused,the minute I had send FSCA this proof,Mr.Peter Khumalo replied to me,they do not had jerudiction over the independent Aumbudsman OBS,whereby the very independent Aumbudsman OBS had ignored the credit facility agreement contract,and many more,Wich I had send also the outcome letter from the independent Aumbudsman OBS,to Peter Khumalo at FSCA ,Pointing step by step,that the independent Aumbudsman OBS tellings are not correct,and that they had sided with Stan bank,I kept on sending emails to FSCA as I cannot understand why they cannot help me,as Stan bank is in breach of the National credit act 34 of 2005,and refuse to adhere to the original registered postes credit facility agreement contract,I am fighting this now from 2018, nonstop,with the Master of the high court where I was shown away,at the moment busy with NCR,Wich also makes my life hell on earth,as they require the impossible,as they ask for a letter of executorsship,and only ones they get this ,then they can only give me a reference number,and once I have a reference number,then NCR will investigate further…..I had send NCR/FIAS 2 copies of the letter of executorsship,but they question this,Wich is very strange to me,as it has all details of the executors of my late wife’s estate,aswell my full details aswell my deseased whife’s, including ID numbers….,they still didnt give me a reference number,I had aslo saw the same complaint on hello Peter,of a lady with the same senario,to get a reference number,Wich she have up,and did not get a reference number at all?
I am not very happy the manner NCR is handling my complaints,and it seem they don’t want to assist me,in my case against standard bank Wich had been unlawfull in many things ,of me late wife’s estate,aswell the denied credit life insurance policy.
I was forced to pay the outstanding balance of the credit outstanding balance,however I did provide all proof,but still denied,as time went , different tellings was told , related to the credit Life insurance policy,in short ,the very last statement,on the outstanding balance shows “overdraft”,Wich is the personal loan protection PPL plan policy “,it shows (provision written off???),Wich is incorrect and misleading,as I know it is only the master of the high court,who can write of debt…
NCR ,is basicly Maki it impossible for me ,to get a reference number from them,and I have proof of the mislead treatment, overwhelming,as I rod them that Standard Bank will not give me any documents,as they allready denied all my proof,and refuse my late wife’s credit life insurance policy,by telling me that it was a different product,by telling the Amended RCP account number,but the credit facility agreement contract is proof that the both are linked ,And I rod them also that the key word is “credit”,only one credit facility agreement and one credit life insurance policy, descriptive,and as per Law ,the National credit act 34 of 2005,As regulated by FIAS/NCR,
My wife’s credit life insurance policy started in 2005,this is when the National credit act 34 of 2005,was signed into law,and the policy ran for 13 years nonstop,paid in full,upto 3 months after date of death!
Policy intact,all premiums paid for 13 Years,and the original registered postes “credit facility agreement contract”,as solid proof ,where the exact same prescribed personal protection PPL plan policy is shown,and this matches the very policy itself….
Then in June 2023, Beuty Mokgogloa, confirmed that the credit life insurance policy was paid upto 3 months after date of death Wich was upto the end of August 2017,where date of death was 10 June 2017….,but when I replied to pay my money back,they simply ignored me …..
Standard bank trust,Wills ,and the independent Aumbudsman OBS,had done me unlawful wrong,and simply deny all lawfull evedence,all above do not agree to that credit life insurance,is protected by the National credit act 34 of 2005,they infact do not obay to any any Law at all, including the Credit facility agreement contract “,this is how watertight my evedence are….and FSCA tell me,they cannot override the dissision by the independent Aumbudsman OBS,but I had then send FSCA all the proof of the final letter from the independent Aumbudsman OBS,and explained step by step,that their version is not the truth,and that they are siding with the bank….
Please,could you assist me,as I cannot give up, standard bank had also done me greatly injustice with many incorrect charges from the wills department the executor of my late wife’s estate,they are me to re inburse me last year 2023,then turned their backs on me,and rold me the same as the credit Life insurance policy,I can seek my own legal advice,Wich I did before aswell,but they wanted a huge sum of money wich I didn’t had,
Standard bank simply brushed me off,and ignore the most concrete lawfull described proof I had given,and simply just take all moneys that does not belong to them,wich I had told them it is Unlawfull,a crime,and theft,they simply don’t adhere to any,all senior heads,were in contradiction of what has been said with different tellings,and I had included 2 CEO’s aswell but don’t get any reply from both,as all know in detail ,as per hundreds of emails,of lawfull binding proof…
My contract details (cellular number 0716851593)
Mr.D.J.Greyvenstein
Email (idsmovers@yahoo.co.za)
I regret that I do not have the capacity to conduct an investigation into this matter, which goes back some years and involves two regulators.
I suggest you contact a consumer journalist, such as Wendy Knowler of the Sunday Times. Her email address is consumer@knowler.co.za
It is so unacceptable to take such drastic measures without proper investigations to the absolute destruction of the FSP. I have a similar situation which is taking over a year to conclude and FSCA expects levies to be paid. Where do you get this money from if you are not trading. This will be another reason to suspend my license …..
This ciuld be Makate 2 case. These big institutions need to be taught a lesson. This goes for the seemingly “untouchable” Big Banks and Fund Managers too!
So did 1Life submit a fraudulent report? Should their conduct ito honestly, integrity and good standing not be investigated?
The Tribunal made no comment or finding as to 1Life’s conduct.
It is known that fraud is rife in the funeral policy space, and insurers monitor and check for suspected fraud. 1Life may have had good reason to suspect fraud. The insurer submitted its forensic report to the FSCA. As the Tribunal pointed out, the FSCA took the drastic step of debarring the broker without conducting its own investigation and weighing up the evidence. The witnesses told the Tribunal that the FSCA did not contact them. If the Authority had done what the Tribunal did, it would not have had grounds to debar the broker.