The Financial Services Tribunal (FST) has set aside Capitec Bank’s debarment of a representative who joined a competitor bank.
The representative, “CP”, was initially employed by Mercantile Bank, which was bought by Capitec in November 2019. CP resigned on 26 November 2022 and was to serve a one month’s notice. He was placed on “gardening leave” during his notice period because he left Capitec to join African Bank.
In February 2023, Capitec’s attorneys wrote a letter to CP, alleging he had breached his duties of confidentiality to his former employer, which conduct amounted to unlawful competition. Capitec’s attorneys demanded certain undertakings from CP, but he denied the allegations.
The following month, Capitec advised CP of its intention to debar him, which it subsequently did after receiving his submission.
After bringing his reconsideration application, CP applied for the suspension of his debarment. Capitec opposed the suspension application and filed an opposing affidavit. But the deputy chairperson of the Tribunal ruled in favour of CP.
In its decision on CP’s reconsideration application, the Tribunal said Capitec confirmed, in its affidavit opposing the suspension application, that it conducted its investigation into CP’s alleged impropriety in December 2022. This was after CP had resigned and was no longer the bank’s representative.
The FST drew attention to section 14(1)(b) of the FAIS Act: the reasons for a debarment must have occurred and become known to the financial services provider while the person was a representative of the provider. A person requires a service contract or other mandate from an FSP to be its representative – per section 13(1)(b).
It was clear from section 14(b) that the jurisdictional fact required for Capitec to have debarred CP was absent. The debarment must be set aside on this ground alone.
CP submitted that “exceptional circumstances” warranted the FST to make a costs order against Capitec, but the Tribunal disagreed.
Although the procedure adopted by Capitec was incorrect, the Tribunal accepted the bank “was labouring under a bona fide but mistaken belief” that it was under a legal duty to debar CP.
When Capitec’s error was highlighted in the suspension application, it withdrew its opposition to the reconsideration application, but it could not, at that stage, withdraw the debarment, the FST said.
