Tribunal sets aside another debarment in latest ruling

A new Financial Services Tribunal (FST) Decision was published on Monday. Once again a debarment was set aside with a request that the Financial Sector Conduct Authority (FSCA) investigate the business activities of the respondent taking into consideration the contents of the decision as well as the conduct of the applicant as a financial services provider whilst in the employment of the respondent. 

Decision - Maisha Arnetha Morata and Sello Simon Rasemana

The FST once again laid out the procedures that must be followed to effect a successful debarment.

The applicant was debarred by the respondent in terms of s 14(1) of the Financial Advisory and Intermediary Services Act 37 of 2002 (FAIS Act), which places a statutory duty on a FSP to debar an representative from rendering financial services if the FSP is satisfied that the representative no longer complies with the requirements set out in Section 13(2)(a) of the FAIS Act or has contravened or failed to comply with any provision of the FAIS Act in a material manner.

Section 13(2)(a) provides that an authorised FSP must at all material times be satisfied that its FSP’s are, when rendering a financial service on behalf of the FSP, competent to act and comply with the fit and proper requirements.

Section 14(3)(a) (as amended), specifically stipulates a prescribed procedure when an FSP debars a representative. The prescribed procedure set out in s 14(3)(a) requires that adequate a notice in writing must be given to the party, stating the reason the intention to debar him, the grounds and reasons for the debarment and any terms attached to the debarment.

There are three jurisdictional requirements for a debarment, namely:

1. The reason for a debarment must have occurred or must have known to the financial service provider while the person was a representative of the provider.
2. Before effecting a debarment the FSP must ensure that the debarment process is lawful, reasonable and procedurally fair.
3. A debarment that is undertaken in respect of a person who no longer is a representative of the FSR must be commenced no longer than six months from the date that the person ceased to be a representative of the FSP. 

The Decision stated, 'We find that the applicant has certainly not conducted herself in accordance with due care, skill, due diligence and integrity. It was required of her to provide financial advice and services only to the extent that she was qualified to do so. She therefore acted contrary to the aforesaid provisions of the Code of Conduct and the FAIS Act. 

The respondent certainly had a hand in this policy. His signature appears on the fraudulent policy. Despite these glaring facts, he does not take any blame for his role in this matter. His conduct and the running of this business warrants an investigation.'