by Joani van Vuuren, Shane Johnson, Siya Ngcamu of Webber Wentzel
In a recent decision, the Supreme Court of Appeal (SCA) considered the interplay between disciplinary inquiries convened under the Labour Relations Act 66 of 1995 (LRA) and debarments of representatives under the Financial Advisory and Intermediary Services Act 37 of 2002 (FAIS Act). The SCA also considered how to deal with institutional bias of debarment decision makers. Prior to this judgment, it was not clear whether a disciplinary hearing convened in terms of the LRA is sufficient to satisfy the procedural fairness requirements in relation to PAJA and the FAIS Act.
In this matter, the SCA confirmed that a separate debarment factual enquiry is not necessary where an employing FSP convenes a disciplinary inquiry (under the LRA) and the charges levelled against the employee / representative are so serious and if the employee / representative is found guilty thereof, it would negatively impact on the employee / representative’s ability to comply with the fit and proper requirements.
However, despite not being required to hold a further debarment factual inquiry, a Financial Service Provider (FSP) should still:
| ● | Provide the employee / representative with a notice detailing the contemplated decision to debar; |
| ● | Afford the employee / representative with the opportunity to make representations in relation to the contemplated decision to debar; and |
| ● | Provide the employee / representative with the outcome of the decision. |
Legislative framework
For an individual to render financial services to the public, he or she must be registered as a representative of a FSP which, in turn, must be licenced as such by the Regulator. Accordingly, representatives are subject to close supervision by the FSP to ensure that representatives meet the fit and proper requirements under the FAIS Act. There is also a positive duty placed on a FSP to debar a representative who does not meet the fit and proper requirements.
The debarment of a representative constitutes administrative action. It is therefore reviewable under the Promotion of Administrative Justice Act 3 of 2000 (PAJA). PAJA allows for a court to set aside administrative action which was ‘procedurally unfair’ or if the administrator who took the decision ‘was biased or reasonably suspected of bias’. A debarring FSP must ensure that it gives the representative an opportunity to be heard.
Click here to read the article that includes the background facts as well as the High Court and SCA review proceedings.
