THE FINANCIAL SERVICES TRIBUNAL

Case Number: FSP14/2023

In the matter between:

CINDY PILLAY	Applicant

and

CLIENTÈLE LIFE ASSURANCE COMPANY LIMITED	Respondent

For the Applicant:	The Applicant appears in person on the documents filed of record;

For the Respondent:	Mr Hans Niewoudt on the documents filed of record.

Date of Decision:	18 May 2023.

Summary: Application for reconsideration – Debarment is justified in circumstances where the misconduct is serious enough to impugn one’s character traits of “honesty and integrity.”

DECISION

1.	The Applicant, Ms Cindy Pillay, approached this Tribunal in terms of section 230 of the Financial Sector Regulation Act 9 of 2017 (“the FSR Act”), challenging the decision of the Respondent, dated 22 February 2021, to debar her (“the application”).

2.	The Respondent, Clientèle Life Assurance Company Limited, is an authorised Financial Services Provider (“FSP”) and the decision maker in this matter.

3.	The parties have waived their right to a formal hearing and the matter will be decided on the papers and submissions filed.

CONDONATION

4.	The application is supported by an affidavit deposed to by the Applicant, wherein the Applicant also attempts to set out the reasons why the application was not filed timeously, citing the loss of her cellular phone as the cause of the delay.

5.	Although the Applicant’s reasons fall short of what is generally required for the Tribunal to grant condonation, the Respondent did not take issue with the Applicant’s request and the Tribunal deems it prudent not be over formalistic and technical, but rather to grant condonation and decide this matter on the merits of the application.

RELEVANT BACKGROUND FACTS AND CHRONOLOGY OF EVENTS

6.	The Applicant was employed by the Respondent from 9 April 2018 as a Telesales Consultant and by virtue of her role she is also a representative in terms of the Financial Advisory and Intermediary Services Act, 37 of 2002 (“the FAIS Act”).

7.	On 22 February 2021 the Respondent debarred the Applicant due to the fact that the Applicant no longer complied with the fit and proper requirements of section 13(2)(a) of the FAIS Act, in that the Applicant was found guilty of committing an act of dishonesty by misleading one Mr Moonasur, who was a client of the Respondent (“the client”), into believing that the Applicant was assisting the client to reinstate his Premium Hospital Cash Back Plan, which the client had cancelled and which had since been discontinued by the Respondent, when in actual fact the Applicant created a new policy, namely a Clientèle Health Event Life Plan, without the client’s knowledge or consent, and in so doing obtained a commission from the sale, which she was not entitled to (“the complaint”).

THE RESPONDENT’S CASE

8.	Upon receipt of the complaint initiated by the client on 8 September 2020, the Respondent lodged a compliance breach against the Applicant and initiated investigations into the allegations referred to in the complaint, which investigations subsequently confirmed that the complaint was valid and resulted in the following charges being preferred against the Applicant:-

“Code 1: Seriously dishonest practices.

A Compliance breach was logged against you on the 9th of September 2020. It was established that on the 24th April 2022 you spoke to a client and during this call, the client informed you that she wanted to continue with a Premium Hospital Cash Back plan that she cancelled in error. You failed to inform the client that the Premium Hospital Cash Back Plan has been discontinued, you however misled the client and informed her that you would help her re-instate the cancelled policy. You then created a Clientele Health Event Life Plan for the client without her knowledge and also did not explain the correct cover and premiums to the client and gave the client the incorrect premiums and cover. The client called in to complain….”

9.	From the summary of the transcript of the call between her and the client and/or the client’s wife, the Respondent averred that it was able to establish and prove that the Applicant provided false information to the client and/or the client’s wife, which created the false impression that their lapsed policy had been reinstated and that the benefits in terms of the lapsed policy would remain unchanged.

THE APPLICANT’S CASE

The grounds for reconsideration:

10.	The Applicant approached this Tribunal on essentially two grounds, which are in the main falling within procedural and substantive aspects. The grounds for reconsideration may be summarised briefly as follows:-

10.1	The Respondent failed to adequately notify her of the date upon which the debarment hearing was scheduled to be heard and, thus, the debarment hearing was conducting in her absence, and she was not given the opportunity to state her case and answer the allegations made against her at the debarment hearing, resulting in her right to a fair hearing being violated.

10.2	The debarment was not justified as the incident arose from a product which she was not trained for and, thus, she committed an innocent error by mistakenly explaining and selling the incorrect policy to the client and/or the client’s wife.

THE DEBARMENT HEARING

11.	The records before the Tribunal reflect that on 16 February 2021 the Respondent notified the Applicant of the charges against her and the Respondent’s intention to debar her, via email, and annexed to the notification was the Respondent’s policy and procedure governing the debarment process which states that, “The reasons for debarment must have occurred and become known to Clientèle while the person was a Representative of Clientèle. The debarment process must be lawful, reasonable and procedurally fair.” 

12.	The records reflect further that on 22 February 2021 the debarment hearing was conducted in absentia.

13.	At the debarment hearing, the Adjudicator, appointed by the Respondent to chair the debarment hearing, considered the charges and the evidence presented by the Respondent, which included the summary of the transcript of the call between her and the client and/or the client’s wife, in his deliberations.

14.	The records reflect further that on 22 February 2021, after having considered the evidence presented at the debarment hearing, the Adjudicator decided that the appropriate sanction for the Applicant’s misconduct was the debarment of the Applicant. The Adjudicator’s reasons for his findings were as follows:-

“Given the totality of evidence provided I do believe that the initiator proved on a balance of probabilities that the Respondent acted in a dishonest manner. The client was fully aware of the previous policy they had with Clientèle. The client recalled the premium amount as well as the debit date including the name of the policy and the benefits thereof. The Respondent continuously misled the client to believe that she is re-instating a policy which she could not do as she is not a Client Services representative.

The Respondent blatantly lied to the client when she was interrupted during reading the script of the new policy that she was capturing by telling the client that it is the old policy that she was referring to when she was reading all terms and conditions. The Respondent’s actions were dishonest and lacked integrity as she proceeded to capture a policy for a client who neither wanted nor requested the policy.”

15.	The Adjudicator’s decision to debar the Applicant was communicated to the Applicant via email on 22 February 2021 (“Notification of Debarment”) and therein the Applicant was duly informed that she may approach the offices of the Financial Services Tribunal should she feel aggrieved by the debarment.

LEGAL FRAMEWORK AND ANALYSIS

16.	The FAIS Act, read with, amongst other things, the General Code of Conduct and the Determination of Fit and Proper Requirements, 2017 (“the Fit and Proper Requirements”), regulates the conduct of FSPs, key individuals and representatives.

17.	Section 2 of the General Code of Conduct states that an FSP must at all times render financial services honestly, fairly, and with due skill, care, and diligence in the interests of clients and the integrity of the financial services industry.

18.	Section 8(1), read with section 7(1) of the Fit and Proper Requirements, states, amongst other things, that the representative must be a person who is (i) honest and has integrity and (ii) of good standing.

19.	FSPs must ensure that their representatives and key individuals are fit and proper persons to be entrusted with providing financial advice to the investing public and, thus, FSPs are charged with a duty to take reasonable steps to ensure that representatives comply with any applicable code of conduct and applicable laws in the conduct of business.

20.	Accordingly, if it is found that a representative has committed an act of dishonesty sufficiently serious to impugn the honesty and integrity of the representative, the FSP must ensure that the representative is debarred in terms of section 14(1) of the FAIS Act.

Procedural aspect

21.	In respect of debarment processes, section 14(2)(a) of the FAIS Act requires that before effecting a debarment, the provider must ensure that the debarment process is lawful, reasonable, and procedurally fair.

22.	An FSP is required, before debarring its representative, to give adequate notice in writing to the person stating its intention to debar the person, the grounds and the reasons for the debarment.

23.	The records before the Tribunal indicate that the allegations levelled against the Applicant, as well as the summary of the transcript of the call between her and the client and/or the client’s wife, were made available to the Applicant at the initial stages of the debarment process.

24.	The records before the Tribunal indicate further that on 16 February 2021 the Respondent duly notified the Applicant of the Respondent’s intention to debar her via email and, thus, there is no question regarding the issuing of notice.

25.	The Tribunal is therefore of the view that the argument raised by the Applicant, that she was not given adequate notice of the date upon which the debarment hearing was scheduled to be heard, is without merit.

26.	Based on the reasoning above, it is the view of the Tribunal that the debarment was procedurally fair.

27.	Now turning to the merits of the debarment itself. The allegations levelled against the Applicant centred around elements of dishonesty. The Applicant admits that she committed an error by explaining and selling the incorrect policy to the client and/or the client’s wife in that she explained the Clientèle Health Event Life Plan to the client, as opposed to the Premium Hospital Cash Back Plan, but argues that it was unfair to disbar her for an incident that arose from a product which she was not trained for.

28.	The Tribunal finds that there is no merit in the Applicant’s argument. Even if the Tribunal was to accept that the Applicant was dealing with a product which she was not trained for, this would mean that the Applicant was admittedly being dishonest with the client and/or the client’s wife as the she failed to disclose this to the client and/or the client’s wife. Accordingly, regardless of whether or not she received training for the product mentioned above, the Applicant was debarred for elements of dishonesty and if a representative provides false information to a client, such conduct evidences that such a representative has a dishonest character.

29.	In this matter, the Applicant was debarred for dishonest conduct which related to her activating a policy without obtaining the required permission from the client. Of importance, the records before the Tribunal indicate that the Applicant has accepted the summary of the transcript of the call between her and the client and/or the client’s wife.

30.	Accordingly, it is the Tribunal’s view that it is clearly evident that the Applicant neither requested nor obtained the requisite permission to activate the Clientèle Health Event Life Plan and such conduct demonstrates that the Applicant cannot be trusted, especially when dealing with members of the public in rendering financial services.

CONCLUSION

31.	It is it is the view of the Tribunal that the Applicant did commit serious misconduct, which misconduct impugns her character of honesty and integrity. There is no question about the Applicant’s guilt. The Tribunal is therefore of the view that on the merits the debarment was warranted and justified.

32.	As stated above in this decision, the debarment process involving the Applicant was procedurally fair and was justified even on the merits. The Applicant was afforded a fair opportunity to make representations at the debarment hearing and elected not to do so. Accordingly, the Tribunal cannot find any basis for the aforementioned grounds of reconsideration, which grounds cannot be sustained.

33.	In the circumstances, the Tribunal can find no grounds to interfere with the Respondent's decision to debar the Applicant.

ORDER:

(a)	Condonation is granted;
(b)	The application for reconsideration is dismissed.

Signed on behalf of the Tribunal on 18 May 2023.
Adv M. Holland & LTC Harms (Chair)