Misconduct in terms of an employer’s code of conduct and governance framework are not necessarily grounds for debarring a representative, the Financial Sector Tribunal ruled this month.
In the matter that came before the Tribunal, the applicant appealed against her second debarment by the FSP. The Tribunal set aside the first debarment on the grounds that her employer had not followed due process. The applicant argued that the FSP could not debar her on the same grounds.
But the Tribunal found that the process followed during the second debarment was fair and in accordance with section 14(3) of the FAIS Act. “The respondent could rely on the same grounds as it did in the previous debarment, and such grounds were based on the investigation findings. There was therefore no need to hold a debarment hearing on the same charges.” The respondent chose to deal with the debarment process in writing and gave the applicant an opportunity to respond in writing, in accordance with section 14(3) and Guidance Note 1 of 2019, the Tribunal said.
The applicant’s second reason for contesting her debarment was that it had been based on conduct emanating from her employment/contractual relationship, but the employer had not demonstrated that she had contravened the FAIS Act.
Respondents’ reasons for debarment
The grounds on which the FSP debarred the applicant were:
- Breaching the Protection of Personal Information Act by disclosing the details of a client to unauthorised persons.
- Failure to have a marketing campaign signed off.
- Breach of trust.
- Failure to meet her contractual obligations.
- Bringing the FSP into disrepute.
- Arranging agreements of product provisions without company consent.
- Dishonesty and breach of integrity at inception and during employment. In this regard, when the applicant completed the FSP’s questionnaire about her fit and proper status, she did not disclose that her previous employer had a debarment enquiry against her. The Tribunal noted that the questionnaire had been completed before the applicant became aware of her previous employer’s intention to debar her. The applicant also said she had been advised by her legal representative that she did not have to disclose the enquiry. In this regard, the Tribunal said her conduct might not have been dishonest, but “it certainly was negligent”. The applicant “should have been aware that such disclosure was material, since it went to the very root of her fit and proper determination”.
The respondent drew the Tribunal’s attention to the respondent’s conduct. “She not only breached her contractual obligations, but her continuous misconduct had led to a breach of trust between the parties, thus causing a breakdown of the relationship between the parties. It was submitted that she had compromised her ability to perform the duties as required in terms of the relevant legislation of a representative in the financial services industry.”
Tribunal’s finding
The tribunal did not dispute that the applicant’s dismissal was justified.
The applicant was expected to abide by and perform her duties within the ambit of the standards and policies put in place by the FSP. But she “unapologetically displayed a dismissive attitude to the employer’s compliance and governance policies”.
Although there was “no doubt” that the applicant’s conduct constituted professional misconduct in terms of the FSP’s code of conduct, the Tribunal said the circumstances of the matter did not justify debarment.
“Section 13 of the FAIS Act dictates that in order for a representative to be debarred, there must be, in this instance, a failure by the representative to comply with the provisions of the FAIS Act in a material manner. We find that the acts of professional misconduct in terms of the employer’s Code of Conduct and policies did not sufficiently demonstrate her non-compliance with the FAIS Act in a material manner.”
The debarment was set aside.
