A failure to adhere to the basic procedures set out in the FAIS Act resulted in the Financial Services Tribunal (FST) instructing an FSP to have another go at debarring a representative who was dismissed for fraud.
On the same day that a disciplinary hearing found the representative, “CF”, guilty of fraud, the FSP sent her a letter stating it would be approaching the FSCA for a debarment based on the dismissal and the charge of gross dishonesty.
Less than two weeks later, the FSP filed a debarment form with the FSCA, debarring CF on the ground of gross dishonesty.
In her reconsideration application, CF submitted that the FSP’s purported notice of its intention to debar her did not constitute such a notice but conveyed an outcome, without affording her a reasonable opportunity to make representations.
The tribunal drew attention to section 14(3)(a) of the FAIS Act. Before an FSP debars someone, it must:
- Give adequate written notice to the person, stating its intention to debar the person, the grounds and reasons for the debarment, and any terms attached to the debarment, including, in relation to unconcluded business, any measures stipulated for the protection of the interests of clients;
- Provide the person with a copy of its written policy and procedure governing the debarment process; and
- Give the person a reasonable opportunity to make a submission in response.
The FST said the FSP failed to comply with these provisions. Its letter was insufficient and displayed a misunderstanding of the process.
An FSP does not in these circumstances apply to the FSCA for the debarment of the representative. The FSP debars the representative and merely registers the debarment with the FSCA, the tribunal said.
The FST set aside the debarment and referred it back to the FSP, “to follow the formal requirements of the Act”.
Comment:
According to the FST’s decision, a labour broker was involved in the dismissal and the debarment, yet it does not seem that the FSP received appropriate advice about the debarment procedure.
Moonstone Compliance’s Employment Law Service provides guidance on debarment matters, ensuring that an FSP’s debarments conform to the FAIS Act and Guidance Notice 1 of 2019.
To find out how our Employment Law Service can assist you, phone 021 883 8000, or email support@moonstonecompliance.co.za, or submit an online enquiry.
