The Financial Services Tribunal (FST) has set aside the debarment of a representative who was dismissed and subsequently debarred for submitting receipts for Uber trips she did not undertake.
The outcome of the case provides another example of why debarring a representative based only on a dismissal for contractual reasons is unlikely to withstand scrutiny by the Tribunal.
For a debarment to be valid, the debarment hearing must establish, based on the evidence, that a representative’s misconduct is sufficiently serious for the rep to be regarded as no longer meeting the Fit and Proper requirements.
The reconsideration application was brought by “LS”, who was employed as a sales agent by LiquidCapital (Pty) Ltd since 2016. The FSP did not oppose her application.
Background to the debarment
The windscreen of LS’s vehicle was damaged while it was parked in the company’s parking area. The windscreen was damaged by stones flung out by a grass-cutter.
LiquidCapital said it would have the damage to her car fixed, and LS would have to make other arrangements to get to and from work while she could not use the car.
The alternative arrangement was using Uber. LS was required to obtain quotes for Uber’s services so that she could be reimbursed for her transport costs.
The head of sales reimbursed LS on the strength of screenshots of SMS’s showing that she apparently paid for Uber rides on 27 and 28 January 2022. LS was paid a total of R861.
The head of sales subsequently asked LS to submit receipts. The receipts differed from those he had received on previous occasions. This resulted in LiquidCapital charging LS with misconduct for falsifying receipts and breaching company policy.
LS pleaded not guilty to the charges and said she paid someone for transporting her to and from work for two days. When her employer requested the receipts, she obtained them from a co-worker.
The disciplinary hearing found LS guilty, and she was dismissed and then debarred for dishonesty.
LS applied for condonation for filing her reconsideration application late, as well as for the suspension of her debarment. Both applications were granted.
In her condonation application, LS said her manager agreed that she could get a lift from a co-employee, who would be reimbursed at the rate charged by Uber for the trips from work to home and back. She initially sent the quotes for the Uber services and later obtained receipts that were generated to be in line with the quotes.
No independent inquiry
The Tribunal found no fault with the procedure followed by LiquidCapital when it decided to debar LS. But the debarment itself was not substantively fair.
The FST said it was “startling” that the chairperson of the debarment hearing found that the “applicant pleaded guilty to the charges set forward during her disciplinary hearing”. This finding misconstrued what appeared in the record of the disciplinary hearing where it was stated that LS pleaded not guilty and challenged the charges proffered against her.
The Tribunal said the chairperson of the debarment hearing failed to embark on an independent inquiry to establish whether LS no longer met the Fit and Proper requirements.
The act of misconduct was clouded in the factual dispute as to the exact nature of the agreement between LS and the head of sales. The only evidence from the record was that LS was allowed to use an Uber quotation to claim for reimbursement for her transport costs. There was evidence that the quotations were accepted by the respondent. But there was no evidence that the Uber receipts differed materially from the quotes.
The chairperson of the debarment hearing relied on the outcome of the disciplinary hearing without dealing with the basis of the finding by the disciplinary hearing. Furthermore, the chairperson did not evaluate the issues with a view to satisfying herself of the seriousness of the misconduct, the FST said.
The Tribunal said LS’s misconduct or alleged misconduct did not involve the rendering of financial services. It drew attention to the fact that LiquidCapital’s debarment policy provided that “a decision by an FSP to debar a representative can be taken only for reasons relating to the rendering of the financial services”, and the process will be invalid if it is used in other cases. Yet, the chairperson of the debarment hearing did not consider this.
“This matter is similar to most other matters where FSPs misattributed the grounds for the dismissal from employment to an automatic debarment of the representative. This approach is completely flawed and legally untenable,” the Tribunal said.
“In many other cases, this Tribunal has cautioned FSPs not to issue a debarment purely on the outcome of the disciplinary hearing. A separate independent inquiry must be conducted in the debarment hearing, and it must be factually established that the conduct is so serious and material that it has impugned the representative’s fit and proper characteristics. In this matter, no such scrutiny was undertaken.”
The FST set aside the debarment.
