This blog was co-authored by Yuveshen Naidoo, Candidate Attorney.

On 26 September 2024, the Financial Services Tribunal dismissed an application for reconsideration of a bank’s decision to debar its former risk advisor. The applicant was found guilty of misconduct and summarily dismissed for sharing confidential client information with a competitor and debarred. The question before the Tribunal was whether the applicant’s conduct in sending confidential client information “without a valid business reason” and without policyholder consent breached the fit and proper requirements under the Financial Advisory and Intermediary Services Act, 2002 (FAIS Act) warranting debarment.

The applicant contended that she had shared the commission statements to prove her commission earnings, she was within her rights to share the commission statements because they contained the applicant’s income details, were addressed to the applicant, and that “proof of gross commission is a requirement for prospective employment in the short-term insurance industry.” The applicant also contended that the documents were non-editable, and that the competitor had subsequently deleted the documents.

The Tribunal noted that the emails sent by the applicant contained confidential client information and that there were other ways for her to verify her earnings including providing a payslip or a redacted version of the information without compromising client information. The Tribunal therefore found that the exclusion in the bank’s code of ethics and conduct for sharing “information relating to the applicant’s own remuneration, tax affairs, or banking” in the bank’s code of ethics and conduct was irrelevant to the proceedings before the Tribunal.

Section 14 of the FAIS Act states that an authorised financial services provider must debar its financial representative from rendering financial services if it is satisfied on the available facts and information that the person does not meet, or no longer complies with, the requirements referred to in section 13(2)(a), or has contravened or failed to comply with any provision of the FAIS Act in a material manner. Section 13(1)(b)(iA) requires every representative of an authorised financial service provider to meet the fit and proper requirements, including personal character qualities of honesty and integrity.

Section 3(3) of the General Code of Conduct for Authorised Financial Services Providers specifically prohibits a provider and its representatives from disclosing “any confidential information acquired or obtained from a client unless the written consent of the client has been obtained beforehand or disclosure of the information is required in the public interest or under any law.”

There was no dispute that the applicant was seeking alternative employment. The Tribunal found that the applicant had acted in her own interests in knowingly disclosing the confidential information of the bank’s clients without the express consent of the clients or the bank in breach of the FAIS Act. The application for reconsideration of her debarment was therefore dismissed.

The decision can be viewed here.