Disbarring representatives of Financial Service Providers

Jul 21, 2015 | 2015, News

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

Discuss this article with me

Recent Articles

Commentary: South Africa’s Energy Transition

Commentary: South Africa’s Energy Transition

What the New Expropriation Act Means for Landowners and Reform in South Africa

What the New Expropriation Act Means for Landowners and Reform in South Africa

Football Hooligans at the Gates

Football Hooligans at the Gates

Understanding the 2025 Regulations and Sectoral Targets Under the Employment Equity Act 55 of 1998

Understanding the 2025 Regulations and Sectoral Targets Under the Employment Equity Act 55 of 1998