A recent decision by the Financial Services Tribunal (FST) highlights that financial services providers must follow the prescribed procedure when debarring a representative.
Lorraine Matlakagobe Sefoka lodged a reconsideration application with the FST after learning from a prospective employer in August last year that she had been debarred.
Her previous employer, Moso Consulting Services (Pty) Ltd, dismissed her three months prior, in June. Her dismissal came after a disciplinary hearing found Sefoka guilty of gross misconduct relating to misuse of the company’s credit card and dishonesty – she transmitted company and client information to her personal Gmail account without authorisation.
The email that informed Sefoka of her dismissal also stated that Moso Consulting Services was contemplating debarring her.
Sefoka lodged a reconsideration application with the Tribunal and applied for her debarment to be suspended. The suspension application was granted.
The Tribunal said section 14 of the FAIS Act sets out mandatory, binding provisions that govern debarment. Section 14(2)(a) and (b) require that the debarment process is lawful, reasonable, and procedurally fair.
If an FSP is unable to locate a person in order to deliver the documents or information required by sub-section (3), after taking all reasonable steps to do so, including dissemination through electronic means where possible, delivering the document or information to the person’s last-known email or physical business or residential address will be sufficient.
Section 14(3)(a) mandates that before debarring someone, an FSP must issue a written notice of the intention to debar, including the reasons, grounds, and terms; provide a copy of its debarment policy and procedures; and allow the person a reasonable opportunity to respond.
It was clear from the evidence placed before the Tribunal that Sefoka was not informed that a debarment hearing was going to take place and that she had the right to make representations. It was also clear that Sefoka was not informed that she had been debarred, and she learned about this from a prospective employer.
The Tribunal found that Moso did not follow any of the provisions relating to the debarment process. “The applicant was presented with a fait accompli of her debarment.”
It set aside Sefoka’s debarment and remitted the matter to Moso for further consideration.
