The Financial Services Tribunal (FST) has handed down a decision in another case arising from the action taken by Standard Bank against staff who activated digital bank accounts without the clients’ consent.
Earlier this year, it was reported that by mid-February, Standard Bank had dismissed 82 employees for their role in illegitimately activating MyMo accounts. At the time, a further eight employees were awaiting the conclusion of disciplinary processes.
The scandal, which first came to the bank’s attention in the fourth quarter of 2021, led to an investigation that took more than a year to conclude. It found that fewer than 3 000 illegitimate accounts had been opened, or less than 0.1% of the bank’s MyMo account base of two million.
In February, the FST heard the reconsideration applications of four former Standard Bank employees who were debarred for irregularly activating MyMo accounts. The Tribunal said there was no basis for it to interfere with the debarments and dismissed the reconsideration applications.
The latest application to the Tribunal was brought by a former employee who had worked for Standard Bank for eight years at the time of her dismissal in April 2022. She was a team leader at a branch in the Western Cape.
Standard Bank set sales targets for MyMo accounts for each of its branches. To count as a “sale”, an account had to be opened at the request of a member of the public, who would become the nominated holder of the account. The account could only be activated by the client depositing money into it.
According to Standard Bank, the applicant, “LR”, admitted that she used her own money to open and activate four MyMo accounts without the respective clients’ knowledge or consent.
The irregularly activated accounts were recorded as sales and counted towards LR’s sales target and performance rating.
Standard Bank debarred LR in May 2022, stating she no longer complied with the Fit and Proper Requirements because she had been found guilty of committing “acts of dishonesty related to gross misconduct”.
Good cause for condonation
The Tribunal granted LR condonation for the late filing of her reconsideration application.
In an affidavit, she alleged the application was not filed timeously because she was under mental stress as a result of being debarred, and she was unfamiliar with the reconsideration process.
Standard Bank opposed condonation, saying LR had admitted she was aware of the deadlines, and there was insufficient evidence to show that stress prevented her from attending to the reconsideration application.
The FST agreed that LR’s affidavit did not detail the link between her stress and her inability to meet the known deadlines for about six months. The fact that LR did not have legal representation was, however, relevant to the assessment of the condonation application.
“The impact of the debarment on the personal circumstances of the applicant is set out in the reconsideration application and repeated in the condonation application. In light of that evidence, the Tribunal finds that good cause has been shown and grants condonation.”
Grounds for reconsideration
In her reconsideration application, LR said she had a clean employment record and contended that she activated the accounts to assist the customers.
She also asked the Tribunal to take into consideration that the misconduct was relatively insignificant – four accounts out of an annual target of 1 500 accounts.
The FST said LR approached the Tribunal on essentially three grounds:
- LR alleged she was wrongfully dismissed and denied that her conduct was fraudulent or deceitful, because she did not derive any benefit from the irregular activations;
- She alleged that Standard Bank never informed her that such activations were acts of dishonesty or prohibited; and
- She raised issues of inconsistency in the disciplinary action in respect of the other employees who also irregularly activated accounts.
Arguments are without merit
The Tribunal said Standard Bank had a rule stating that the activation of a MyMo account “is a customer-initiated-credit transaction posted into the account”. This rule was reiterated in an email, dated 20 February 2020, by the head of the bank in the Western Cape. LR received and read this email.
The Tribunal said LR did not dispute that she made false misrepresentations and found there was no merit in her arguments in light of the facts in the record.
When LR irregularly activated the MyMo accounts, she knew she was “perpetuating an untruth and false circumstance” by creating the impression that the respective account-holders had activated the accounts, whereas this did not reflect the factual reality for each of those customers, the FST said.
The Tribunal concluded that LR committed serious misconduct, which impugned her character of honesty and integrity. That LR was guilty was beyond question. The debarment was therefore warranted and justified.
