This blog was co-authored by Yuveshen Naidoo, Candidate Attorney.
On 23 December 2024, the Financial Services Tribunal upheld an FSP’s decision to debar its representative in terms of section 14(1) of the Financial Advisory and Intermediary Services Act, 2002 (FAIS Act) for breaching the “fit and proper” requirements under the FAIS Act. In assessing the merits of the debarment, the Tribunal found that the representative’s actions showed a troubling lack of honesty and integrity which raised significant concerns about his competence and suitability as a financial services representative. The applications for condonation and for reconsideration were dismissed.
The applicant was a FAIS representative and allowed an unqualified administrator to establish and operate a separate company providing insurance broking services within the taxi industry for the FSP. Attempts to resolve a client’s complaint about an unpaid claim in 2022 revealed their involvement with the company providing unauthorised broking services. The representative was debarred for misrepresenting his relationship with the company, failing to disclose a conflict of interest, breaching the Protection of Personal Information Act 2013 for sharing confidential client and company information with third parties, and providing unauthorised access to the FSP’s intellectual property.
The Tribunal highlighted that an authorised financial services provider must “be satisfied at all times that its representatives are competent and comply with the ‘fit and proper’ requirements when rendering financial services”. Section 8 of the FAIS Act sets out three categories for assessing whether a representative is fit and proper, including personal character qualities of honesty and integrity, competence in relation to experience, qualifications and knowledge, and financial stability and soundness and a representative’s ability to manage their own finances responsibly.
The representative’s debarment was found to be necessary to protect the public and the financial services industry. The application for condonation, and therefore the application for reconsideration, was dismissed.