The Financial Services Tribunal (FST) has found that a financial services provider did not make sufficient effort to ensure that a representative received notification of an intention to debar. This is despite the FSP’s submissions that it served the notice via courier, WhatsApp, and email, and tried to phone the former employee.
The debarred representative was employed as a financial adviser by Metropolitan Franchise (Pty) Ltd. She was dismissed in April last year after being found guilty by a disciplinary hearing. She was debarred the following month.
Notification of her dismissal was sent to her work email address. She was simultaneously informed that she should expect Metropolitan to initiate debarment proceedings against her.
The Tribunal’s decision was devoted solely to the procedural aspects of the debarment, so the reasons for the dismissal and debarment are not discussed in this article.
At issue was whether Metropolitan complied with section 14(3)(a) read with 14(2)(b) of the FAIS Act by giving the applicant adequate notice of its intention to debar her.
Section 14(3)(a) of the Act states that a financial provider must before debarring a person:
- give adequate notice in writing to the person stating its intention to debar the person, the grounds and reasons for the debarment, and any terms attached to the debarment, including, in relation to unconcluded business, any measures stipulated for the protection of the interests of clients;
- provide the person with a copy of the financial services provider’s written policy and procedures governing the debarment process; and
- give the person a reasonable opportunity to make a submission in response.
Section 14(2)(b) states that if a provider is unable to locate a person in order to deliver a document or information under sub-section (3), after taking all reasonable steps to do so, including dissemination through electronic means where possible, delivering the document or information to the person’s last known email or physical business or residential address will be sufficient.
The applicant brought an application for reconsideration on the ground that she was not served with a copy of the notice of intention to debar, nor did she receive any communication from Metropolitan about the debarment hearing.
She also brought an applicant to suspend the debarment order.
The Tribunal dismissed the suspension application in August last year because it seemed likely that Metropolitan had complied with the notification requirement in the FAIS Act, and it appeared that the applicant did not want to address the facts of the matter.
The applicant then filed her augmented grounds for reconsideration, in which she addressed the merits and denied the allegations made against her.
Metropolitan opposed both applications.
Credit bureau record
According to the Tribunal’s decision, Metropolitan said it served the applicant with copies of the notice of intention to debar via courier – sent to her last-known physical address on its records. The notification was also sent via WhatsApp to her last-known cellphone number on Metropolitan’s system. The WhatsApp was undelivered.
Metropolitan said it did not have the applicant’s personal email address on record. It therefore conducted a search on credit bureau TransUnion. The FSP tried to contact the applicant telephonically on the last-known number on record and on the mobile number listed as the applicant’s on the TransUnion report.
The debarment notices were emailed to a Gmail address listed on the TransUnion report as the applicant’s last-known email address.
Metropolitan said it did not receive any response to the emailed debarment notices, so it proceeded with the debarment. The final debarment notification was also sent to the Gmail address on the TransUnion report.
Two personal email addresses
The Tribunal resolved the matter based solely on the papers, because both parties opted against a formal hearing.
Its decision, delivered on 1 April, linked three email addresses to the applicant:
- A work email address, which the applicant acquired when she was employed by Metropolitan.
- The Gmail address obtained from TransUnion, which, for the sake of preserving the applicant’s confidentially, shall be called the “full name Gmail address”.
- Another Gmail address – the “shorter Gmail address”.
The applicant denied that the “full name Gmail address” belonged to her, maintaining she had always used the “shorter Gmail address”, which was the email address used in her reconsideration application.
The Tribunal said there was evidence that supported the applicant’s version that the “shorter Gmail address” was her personal email. Former example, this email was used in internal correspondence with other departments at Metropolitan.
The FST said Metropolitan’s notification of the debarment inquiry was sent to the “full name Gmail address”. Outlook confirmed that the delivery was completed, but no delivery notification was sent by the destination server.
The final debarment decision was also sent to the “full name Gmail” address. The delivery was completed, but the destination server did not send a delivery notification.
The Tribunal said it was clear from the facts that the applicant, while employed by Metropolitan, had two email addresses: her work email address and her private email address, which was the “shorter Gmail address”.
It was “puzzling” that the TransUnion report reflected the “full name Gmail” address.
The FST said Metropolitan did not provide any details about the delivery via courier to the applicant’s the last-known physical address its system, which was still her physical address.
The Tribunal said it was “probably correct” that the applicant did not receive the notifications, but there was “sufficient doubt” that Metropolitan “took all reasonable steps” to deliver the notice of intention to debar.
It said Metropolitan should have updated its records at least at the time of the disciplinary hearings or have provided evidence of delivery via courier.
The Tribunal set aside the debarment and remitted the matter to Metropolitan for reconsideration.
