A recent Financial Sector Tribunal decision raised two very interesting perspectives on when dishonesty should not be used as grounds for debarment.
Case number one
The debarment was based on a finding that the applicant lacked the quality of honestly. He was found guilty of misconduct and dishonesty in terms of the Bank’s Disciplinary Code and Procedure in that he recorded the incorrect sign-in and sign-off times in the attendance register over a four-week period. In addition, he was not on the bank’s premises on the 22nd of June 2020 and failed to capture the relevant leave on the bank’s system which meant that his leave balance did not deplete accordingly.
The applicant admitted his ‘mistakes’ but denied that it was because of dishonesty.
The Bank’s attitude is that it is obliged to debar the applicant and for this it relies on the following extract from Financial Services Board v Barthram, [2015] 3 All SA 665, 2018 (1) SA 139 (SCA):
“The debarment of the representative by a FSP is evidence that it no longer regards the representative as having either the fitness and propriety or competency requirements. A representative who does not meet those requirements lacks the character qualities of honesty and integrity or lacks competence and thereby poses a risk to the investing public generally. Such a person ought not to be unleashed on an unsuspecting public and it must therefore follow that any representative debarred in terms of section 14(1), must perforce be debarred on an industry-wide basis from rendering financial services to the investing public.”
The Tribunal notes that the Bank had emphasised the last sentence, but it did not take note of the middle sentence. The dishonestly in this case, if any, did not indicate that he posed a risk to investing and unsuspecting public.
Case number two
The Tribunal was of the view that a representative’s dishonesty, negligence or incompetence must be sufficiently serious to impugn the honesty and integrity of such representative.
The applicant was employed as a multi-skilled sales and services consultant at the bank. She was at all relevant times a representative as defined in the FAIS Act.
On 14 June 2019, a disciplinary and debarment hearing (the first disciplinary debarment hearing) was held. The charge reads: “Dishonesty in terms of paragraph 4.2.1 of the Bank’s Disciplinary Code and Procedure in that it is alleged that on or about 28 May 2019, you conducted yourself dishonestly when you attended to completing customer documents by copying and pasting the customer’s signature onto such documents and/or when you created false document(s) for the customer in order to bypass the KYC tool/Bank rules.”
The applicant pleaded guilty to the charge at the hearing and was dismissed as a consequence thereof and debarred.
The second debarment hearing was held on 12 February 2020 after the Tribunal found that the first debarment proceedings lacked fair process. Consequently, the notice of intention to debar was issued on 28 February 2020. The debarment findings were that the employee no longer complied with the “fit and proper requirements”.
The Tribunal reasoned that the motive behind her actions was “…to expedite the execution of the client’s instructions and not to defraud or otherwise harm the client or cause her loss.”
Can one be slightly pregnant?
This certainly seems to be a valid question. In both instances, the acts of dishonesty had very little to do with the person’s actions under the FAIS Act. In the first case, the Tribunal noted: “The issue was more a labour issue than a FAIS issue and it appears that the Bank conflated the two.”
The Tribunal has certainly contributed in a significant manner to the fair treatment of representatives since its establishment, and provides legal clarity in many instances where informal dispute resolution mechanisms fall short due to the informal processes it is allowed to follow.
