Does a lengthy delay between a notice of intention to debar and the debarment itself undermine the procedural lawfulness of the debarment? A representative contested his debarment on this ground in a reconsideration application to the Financial Services Tribunal (FST) recently.
The former First National Bank (FNB) branch consultant was dismissed and subsequently debarred for issuing letters that vouched for a customer’s creditworthiness. He was not authorised to issue the letters.
The applicant, “MC”, resigned from FNB on 5 August 2021, citing “personal and health reasons”. The FST noted that MC’s letter of resignation followed an email from his manager enquiring about the two letters.
Later that month, FNB dismissed MC and placed his name on the Register of Employees Dishonesty System (REDS), following a disciplinary hearing that he did not attend.
REDS is a database on which are recorded the names of employees in the banking industry who have been dismissed for dishonesty-related offences.
MC was sent a notice of intention to debar in November 2021. The notice stated that he no longer complied with the requirements of section 13(2)(a) of the FAIS Act, specifically the Fit and Proper requirements of honesty, integrity, and good-standing.
FNB’s case against MC concerned two letters he sent to a client without a mandate from the requisite bank officials.
In the first letter, issued in July 2021, MC confirmed that the customer was creditworthy and capable of acquiring funds up to R900 million. This was misrepresentation because MC had failed to investigate and verify the information with the business accounts manager, FNB said.
MC issued a second letter the following month, confirming that the customer was creditworthy and had access to the funds required to cover the transaction.
In addition, MC misrepresented himself as an account manager, whereas he was a branch consultant.
The FST said the company’s account was practically dormant, and it had received deposits of only R25 000 over the previous two years. Therefore, it was simply untrue for the letter to state that the company was “a valued client”, “creditworthy” and “very good for business”.
In his submission to the tribunal, MC said the purpose of the letters was merely to confirm that the company had an active account at FNB.
The FST said the terms of the letters showed this excuse was “patently dishonest”. Furthermore, MC had not presented his “new version” at either his disciplinary hearing or his debarment hearing.
FNB debarred MC on 4 February 2023 after a debarment hearing in December 2022, which he also failed to attend.
MC complained that the debarment was procedurally unfair because the debarment notice was issued a year and two months after he was issued with the notice of intention to debar.
The FST said although the delay was long, it was not in breach of section 14 of the FAIS Act or of the Promotion of Administrative Justice Act.
FNB said the delay was because of the difficulty in convening a quorum of six from different business divisions. The tribunal accepted the bank’s explanation.
The FST dismissed the reconsideration application.
