Disbarring representatives of Financial Service Providers

Representatives of Financial Service Providers (FSPs) render financial services to clients for or on behalf of a FSP. This may involve selling financial products such as insurance policies and unit trusts to the public. According to the legislation governing FSPs (Financial Advisory and Intermediary Services Act 2002), a FSP must ensure that its representatives meet the fit and proper requirements and are competent to act. It is imperative that representatives are not dishonest or lack integrity.If a FSP does not satisfy this requirement, it may be guilty of an offence and be liable on conviction to a fine not exceeding R10 million or to imprisonment not exceeding 10 years or to both such a fine and imprisonment.

Last month, in Financial Services Board v Barthram, the Supreme Court of Appeal (“SCA”) held that if a person who is debarred by a FSP; is also debarred from working in the financial services industry and are prevented from rendering financial services in order to protect the investing public. Therefore, a representative who is dishonest and acts without integrity, may be debarred by his or her employer and the Registrar of FSPs on an industry-wide basis.

The correct due process before any disbarment is critical, however, and before a FSP may disbar a representative, the FSP must provide the representative with any necessary information and allow for a reasonable time to make representations.

Read the judgment here: http://www.justice.gov.za/sca/judgments/sca_2015/sca2015-096.pdf