If a financial services provider debars one of its representatives in terms of section 14(1) of the FAIS Act 2002 on grounds relating to honesty and integrity, the debarment means that the representative is debarred on an industry-wide basis from rendering financial services to the investing public. This issue was dealt with by the Supreme Court of Appeal in Financial Services Board v Barthram.

The debarment on valid grounds of a representative by an FSP is evidence that it no longer regards the representative as having either fitness and propriety or competency requirements. A representative who does not meet those requirements lacks the character qualities of honesty and integrity or lacks competence and poses a risk to the investing public generally. Such a person ought not to be unleashed on an unsuspecting public. It therefore follows that such a debarment must apply industry-wide.

That is why debarment should only occur after the representative has been given the opportunity of a fair hearing. We deal with this in a separate blog post. In this matter the insurer had barred one of its sales representatives on integrity grounds (which were not upheld by the court).  It was held that the debarment, if upheld, would have affected his employment by all other FSPs.