The Financial Services Tribunal (FST) has set aside the debarment of a Nedbank financial consultant who was debarred for writing a client’s verbal instruction into the Review Record of Advice after she signed it.
In November 2021, the consultant, “DS”, discussed an investment with a client, “Mrs D”, who signed certain documents, including the Review Record of Advice, according to the FST’s decision.
DS subsequently wrote on the Review Record of Advice an instruction purportedly given to him by Mrs D to the effect that she was to receive from the investment a monthly income of R8 000. The inscription was not drawn to Mrs D’s attention, the decision said.
Following a complaint by Mrs D’s daughter, Nedbank found that the instruction had been added to the record.
A disciplinary hearing found DS guilty of “gross misconduct: dishonesty” on the basis that:
- Between November 2021 and July 2022, he amended a Review Record of Advice that had already been signed by Mrs D;
- At the time of the amendment to the record, Mrs D was no longer in his presence, and he was aware that she had not seen or approved the note in its amended form; and
- On 29 July 2022, DS misrepresented to the Nedbank Client Complaints Desk that the record dated 19 November 2021 was the form that had been signed by Mrs D.
DS was dismissed.
Nedbank informed DS on 1 December 2022 of its intention to debar him, and it filed the final debarment notice with the FSCA on 13 December.
In the notice of the intention of debar, Nedbank said DS’s “dishonest” actions meant he did not meet the Fit and Proper Requirements prescribed by the FAIS Act and Board Notice 194 of 2017. In support of this, the notice cited the same grounds on which DS had been found guilty of gross misconduct.
DS filed a reconsideration application on 1 February 2023.
He contended there was no dishonesty in noting in manuscript the instruction given to him verbally by Mrs D. Furthermore, Mrs D was not prejudiced because of the inscription, and she did not complain on receipt of the income.
Mrs D’s complaint, among other things, was that she suffered a loss because of DS’s advice and actions. The FST’s decision does not provide any further information in this regard.
The tribunal’s decision
The Fit and Proper Requirements are central to the qualities expected from a representative. However, Nedbank “fell short” in not taking into account the effect of the debarment on DS, the FST said.
The legal effect of the debarment is that DS is debarred on an industry-wide basis from rendering financial services to the investing public. It is a far-reaching penalty in circumstances where Mrs D did not complain about the R8 000 income paid to her, DS did not gain from the manuscript change, and the conduct, although dishonest, was not, in the tribunal’s view, gross, Advocate Sandhya Mahabeer said in the FST’s decision.
The tribunal found that the debarment of DS was not justified under the circumstances.
The FST granted DS’s reconsideration application and set aside the debarment.
I am afraid , that this practice seems to be dishonest , as DS, had no permission to change the document, the decision by FST, does set a very strange precedent , is this ethical and correct , is it moral , is it gross negligence, that he forgot to do what the client requested ?then tried to cover it up . . the minimum is if you have made a mistake you should advise the client and rectifie . THERE is also the keyman to consider . did he allow this ,the FST has opened a Pandora’s box what will be next.