The Financial Services Tribunal (FST) has dismissed a former bank employee’s application for his debarment to be reconsidered, saying that even if he was only trying to help clients, as he claimed, it was no excuse for his dereliction of duties under the Financial Intelligence Centre Act (Fica) and the FAIS Act.
During a disciplinary inquiry in October 2021, “TM”, a branch consultant at First National Bank’s Tubatse Crossing branch in Burgersfort, Limpopo, was charged with falsifying documents.
It was alleged that he falsified the proof of residence letters of eight clients from 14 to 22 July 2021. It was alleged that he used blank municipality letters, obtained from the Fetakgomo Tubatse Municipality, to complete the address details of these eight customers.
Section 21 of Fica requires all customers to be identified and verified before a business relationship can be established. In terms of the Act, the bank is required to obtain and verify, at minimum, a prospective customer’s identity, address, and source of funds.
During the disciplinary hearing, TM admitted to having completed the forms of five clients. He said he was assisting customers to complete their proof of residence municipal forms. He claimed customers would present incomplete forms, and he would fill in the forms on their behalf. These forms are meant to be completed by a ward councillor.
This is the second time this year that Moonstone reported on an FNB employee who was held accountable for manipulating the verification process.
In July, the FST rejected a former bank employee’s submission that FNB acted unfairly and inconsistently when it debarred her because “she had only acted according to what was standard practice at the branch” where she worked.
Read: Tribunal rejects debarred FNB representative’s ‘prevailing practice’ defence
Good intentions
When TM was asked to explain his actions, he said when he had completed the “missing parts” on clients’ proof of address verification documents, he had no intention of deceiving anyone or being dishonest. He further submitted that he had not been aware that he had been doing wrong.
FNB, however, contended that TM had failed to comply with the Fica in that customer identification had to be done by an independent party and “the bank consultant was not an independent party”.
TM was found guilty and dismissed from his employment.
FNB’s Disciplinary Code and Procedures provide that once found guilty of altering or falsifying any certificates or documents, the sanction for the offender is dismissal and for the offender’s name to be placed on the Banking Council Register of Dishonest Employees (REDS) list. The latter usually takes place after termination of employment.
Not happy with the disciplinary hearing’s outcome, TM referred his matter to the Commission for Conciliation, Mediation, and Arbitration (CCMA). In December 2021, a settlement was reached whereby FNB would treat TM’s termination of employment as a voluntary resignation. It was also agreed that FNB would remove the employee’s name from the REDS list.
Just over three months later, FNB notified TM of its intention to debar for, among other things, his failure to comply with the requirements of the FAIS Act – specifically, the Fit and Proper requirement of honesty, integrity, and good standing.
The decision to debar him was communicated in a letter dated 1 October 2022.
Application for reconsideration
In TM’s application to the FST for reconsideration, he argued that the decision to debar him was taken without his version being heard by the panel.
He further alleged that the parties had agreed at the CCMA that he would withdraw his labour dispute case against FNB without admitting guilt in exchange for the bank not debarring him or submitting his name for listing under REDS.
Last, he put forward that the documents that clients handed him as proof of address were issued by the local councillor and local municipality official, signed and stamped by the said officials. He said they were then handed to the clients for them to complete. In turn, the clients asked him for assistance “because they were afraid that they would make alterations to the form”.
Fair appeal may cure procedural irregularities
The Tribunal said that, according to the notice of debarment, TM was debarred without his version being heard because no submissions from him were received for consideration.
TM argued that he made submissions and delivered them on 11 April 2022 to an individual who, according to his knowledge, was responsible for labour relations at FNB.
The FST said TM’s response to the notice of debarment (attached as an annexure to his reconsideration application) was undated, and there was no proof of service on FNB.
The chairperson of the FST panel, Advocate Makasane Mashaba, said he did not deem it necessary to make any determination on the veracity of TM’s version that he did serve his submissions.
He said “it can be safely concluded” that TM’s submissions were not considered when he was debarred.
The Tribunal, when it considered TM’s application, took into account his submissions as contained in the annexure.
“I am therefore of the view that since the applicant’s submissions were considered by this panel, this then cures and addresses any possible procedural prejudice he might have suffered due to his submission not being considered.
“Procedural irregularities may, depending on circumstances, be cured by a procedurally fair appeal. I accordingly find no merit in the applicant’s submission that the fact that his submission was not taken into account prior to him being debarred warrants his debarment to be set aside only on this point,” Mashaba said.
Consideration of the merits
Responding to TM’s submission about an alleged agreement with FNB, the Tribunal said such a quid-pro-quo agreement with reference to possible debarment had not been recorded anywhere.
“Even if there was such an agreement to the effect that the respondent would not debar him, this Tribunal should (not) be bound by the terms of such an agreement. It would be improper for this Tribunal to endorse and abide by the terms of a settlement agreement which negates its powers to investigate the question whether an FSP’s representative Fit and Proper status,” Mashaba said.
Addressing TM’s third point, Mashaba said he found it hard to believe that TM had not been aware that what he had been doing was wrong.
He said the branch consultant ought to have been aware that FNB’s Disciplinary Code and Procedure made it a dismissible offence for altering or falsifying certificates or documents.
He added that FNB’s Customer Due Diligence also required that the document that serves as an address verification document had to be an independent form of proof of address.
“In other words, the document 13 purporting to be a proof of address must be completed by an independent person,” Mashaba said.
The chair added that TM had also undergone training, including Introduction to FAIS supervision 2020 (Assessment) and Introduction to FAIS supervision 2020 (eLearning).
As to TM’s assertion that it wasn’t his intention to be dishonest, Mashaba said it was plausible that the applicant simply had been assisting members of the public in completing the proof of residence forms.
“But that does not make his actions right. Even the road to hell is paved with good intentions. He was aware of what was required from him as an FSP representative and he derelicted from those duties,” Mashaba said.
