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THE FINANCIAL SERVICES TRIBUNAL

 

CASE NO: FSP34/2024

 

In the matter between:
JANELL GANESS	Applicant
and
SANLAM LIFE INSURANCE LIMITED	Respondent

 

Tribunal Panel:                           Judge FD Kgomo, Adv SM Maritz & Prof M Sigwadi

 

Appearance for Applicant:           Adv R Blumenthal

 

Appearance for Respondent:      Ms A Mkhize

 

Date of Virtual Hearing:              21 October 2024

 

Date of Decision:                        15 November 2024

 

Summary:                  Application for Reconsideration in terms of section 230 of the Financial Sector Regulation Act, 9 of 2017 (“FSR Act”) against a decision of the Respondent to debar the Applicant in terms of section 14 of the Financial Advisory and Intermediary Services Act, 2002 (“the FAIS Act”) due to a material breach of the provisions of the FAIS Act and to terminate the Applicant’s advisor contract. Non-compliance with the FAIS Act and FAIS General Code Conduct (2014) established.

 

DECISION

 

A.                     Introduction

 

1.                      The Applicant, Ms Janell Ganess, applies for reconsideration in terms of section 230 of the Financial Sector Regulation Act, 9 of 2017 (“the FSR Act”) of a decision by the Respondent, Sanlam Life Insurance Limited (“the Respondent” or “Sanlam”), dated 13 March 2024, which she received on the same date. The decision resulted in her debarment in terms of section 14(1)(a) of the Financial Advisory and Intermediary Services Act, 37 of 2002 (“the FAIS Act”) and the termination of her Sanlam Management Outsourced (MO) BlueStar Business Authorised Principal Contract (Contract Code 1011) (“the advisor contract”) due to non- compliance with section 13(2)(a) of the FAIS Act. The Applicant allegedly breached the FAIS Act and Part 2(2) of the FAIS General Code of Conduct for Authorised Financial Services Providers and their Representatives (2014) (“the General Code of Conduct”), in a material manner, by lacking honesty, integrity and good standing, and by failing to render financial services with due skill, care and diligence in the interest of clients and the integrity of the financial services industry. These allegations rendered her unfit to serve as a representative, citing specific breaches under both her advisor contract and her proxy form/declaration as an intermediary.

 

2.                      The Applicant further seeks condonation for the late filing of her reconciliation application, which was filed on 20 May 2024. Subsequently, on 10 July 2024, the Applicant filed her augmented and supplementary grounds for reconsideration.

 

3.                      This Tribunal shall first consider the Applicant’s condonation application, followed by an outline of the relevant background facts and chronology, and then proceed to examine the Applicant’s reconsideration application, the Respondent’s opposition, and finally, the Tribunal’s analysis and decision.

 

B.                    Applicant’s Condonation Application

 

4.                      The Applicant seeks condonation for the late filing of her reconsideration application, submitted on 20 May 2024. The Respondent’s decision to debar the Applicant was issued on 13 March 2024 and was received by the Applicant on the same date.

 

5.                      In terms of section 230(2) of the FSR Act, an aggrieved person may apply to the Tribunal for a reconsideration of a decision taken against it, which application must be made-

 

“(a)        if the applicant requested reasons in terms of section 229, within 30 days after the statement of reasons was given to the person; or

 

(b)         in all other cases, within 60 days after the applicant was notified of the decision, or such longer period as may on good cause be allowed.”

 

6.                       Section 1(h) (Definitions) of the Tribunal’s rules defines a “day” as ordinary days, not court or business days, counted exclusively from the first day to the last, except where the last day is a Sunday or public holiday, in which case it is excluded.

 

7.                       The legal principles and factors for condonation, as set out in Steenkamp and Others v Edcon Limited (CCT29/18) [2019] ZACC 17 and Grootboom v National Prosecuting Authority and Another (CCT/08) [2013] ZACC 37, include the relief sought, the extent and cause of delay, the effect of the delay on the administration of justice, the reasonableness of the explanation for the delay, the importance of the issues to be raised and the prospects of success.

 

8.                      On 26 March 2024, the Applicant requested reasons for the Respondent’s decision in terms of section 229 of the FSR Act, thereby requiring her to file the reconsideration application within 30 (thirty) days of receiving the statement of reasons.

 

9.                      The Applicant’s explanation for the delay is as follows: On 13 May 2024, after the period for the Respondent’s deadline to provide reasons had expired, she requested a response. The Respondent replied on the same day, claiming that reasons had been sent on 5 April 2024, attaching the original email. However, the Applicant had no record of receiving this correspondence.

 

10.                   Following a diligent search for the alleged email, the Applicant consulted with her email provider, Afrihost, which confirmed on 16 May 2024 that the email of 5 April 2024 was not received by its server.

 

11.                   Before receiving Afrihost’s confirmation, the Applicant instructed her attorneys to proceed with her reconsideration application. Counsel was briefed on 16 May 2024, and the application was ultimately filed on 20 May 2024, approximately 7 (seven) days beyond the prescribed period.

 

12.                   The Applicant submitted that she only became aware of the email of 5 April 2024 on 13 May 2024.

 

13.                   The Tribunal is satisfied with the Applicant’s explanation for the late filing of her reconsideration application. It has further taken into account that the Respondent has not opposed the condonation application, nor has it alleged any prejudice that would result from the granting of condonation. Additionally, the delay was not excessive. Accordingly, condonation is granted.

 

C.                     Relevant Background Facts and Chronology

 

14.                   On 5 January 2017, the Applicant joined Sanlam as a Financial Advisor and Authorised Principal of Jage MO Bluestar (“Jage”), a Sanlam franchise and tied agent.

 

15.                   The Applicant, appointed Ms T Meek (“Ms TM”) as an Insurance Administrator, later promoting her to Office Manager. Ms TM’s appointment and duties was solely determined by the Applicant without the Respondent’s involvement. Ms TM acted under the Applicant’s authority at all times.

 

16.                   After the first quarter of 2023, Sanlam’s Ms Zulu (“Ms Z”) advised Jage to improve its monthly policy sales and retention index. It was decided to submit more policies with lower premiums to meet these goals.

 

17.                   Ms TM suggested that she would refer prospective clients that frequent her brother’s high-end bottle store to the Applicant. The Applicant would meet with the clients at a coffee shop at a mall where she (the Applicant) would then provide the necessary advice. The type of clients that were referred by Ms TM were general workers at the mall such as cashiers, sales persons, etc., which was suitable for increasing policy volumes with smaller premiums.

 

18.                   Due to high costs, in-person meetings became unfeasible, leading the Applicant to meet clients via Zoom or telephonically.

 

19.                   It was agreed that Ms TM would prepare the quotes and handle all administrative aspects, including filling in forms and assisting clients with signing documents, as well as collecting the clients’ bank account information and obtaining copies of clients’ identity documents.

 

20.                   Before meetings, Ms TM would create a basic profile on Sanlam’s online quoting system referred to a “SanQuote”. Following a virtual meeting with the Applicant, the Applicant advised clients on financial products based on their needs and goals. According to the Applicant, she advised all clients holistically on various financial products based on the clients’ financial position, their objectives and needs analysis.

 

21.                   After clients considered the advice, they communicated their decisions to Ms TM. Ms TM sent Sanlam’s Application for Employment Benefits 2007 (“AEB2007”) form for signature, either electronically or in person, to clients. The AEB2007 authorised Jage to submit applications through Sanlam’s Auto New Business (“Autonub”) system. Once policies were approved, clients received contract documents for final consideration. Ms TM uploaded the completed AEB2007 forms onto e-sign and forwarded them to the Applicant for signature as the advisor and intermediary. The Applicant would also sign the manager declaration form known as the NUB005AE via e-sign.

 

22.                   The process then moves on from the quoting stage to the Autonub part, which essentially marks the beginning of the submission process to Sanlam. As part of the Autonub process, the preferred debit order date (which cannot be more than 20 days after the date of the policy), the client’s banking details and the payer’s details, must be inserted. According to the Applicant, Sanlam then verifies the banking information and provide a tick or check mark. If no tick or check mark appears the application cannot proceed. The entire Autonub process was completed by Ms TM. After all information has been captured, the Autonub system requires certain documents to be uploaded such as the signed AEB2007, etc. During this entire process Ms TM was solely responsible to collect the required documentation and submit it to Sanlam.

 

23.                   When the policy application issued, the Applicant is paid commission by Sanlam. In the event that the policy should lapse (due to non-payment of premiums), the commission earned is recovered or “clawed back” from the Applicant by Sanlam.

 

24.                   According to the Applicant it was agreed between her and Ms TM that for all clients referred to her (the Applicant) by Ms TM in respect of which policies issued, Ms TM would be paid a “referral fee/commission”. A “referral fee/commission” were earned by Ms TM for approximately 89 policies issued. During April 2023, the Applicant increased the commission split for the “referral fee/commission” to be paid to Ms TM to 80/20 to assist Ms TM with financial difficulties she was experiencing. On 26 April 2023, Mr TM earned over R48k in “referral fees/commission”. During the period 21 to 26 May 2023, Ms TM earned “referral fees/commission” of R61,500. Between 27 and 28 June 2023, Mr TM earned R56k and during July 2023 Ms TM earned R40k “referral fees/commission”. According to the Applicant, Ms TM could not get an associate’s contract with Sanlam because she was in debt review and could only get the contract when she had cleared all debt.

 

25.                   On 24 August 2023, a debit order of a client referred by Ms TM was returned as unpaid due to an “invalid bank account” or “no such account” notice (“the unpaid notification”). When questioned by the Applicant, Ms TM denied responsibility, attributing the issue to Sanlam. Multiple subsequent unpaid notifications led the Applicant to contact the clients, who were unresponsive, raising her suspicion of fraud by Ms TM. Towards the end of August 2023, Ms TM absconded.

 

26.                   Jage initiated an internal investigation of clients referred by Ms TM. It was found that all unpaid notifications involved Ms TM’s referrals, and that these policies were future-dated during the Autonub process to start three or four months later. This allowed Ms TM to receive referral fees upfront, with the violations resultantly only becoming apparent months later.

 

27.                   The Applicant dismissed Ms TM with immediate effect on 31 August 2023.

 

28.                   On 29 September 2023, the Applicant informed Sanlam via email of irregular practices in her back office affecting her advisor code D811582 and requested an in-person meeting. On that same date, Sanlam’s Operations Manager of Gauteng South, Mr L Peacock, sent an email to the Regional Executive of Gauteng South, Mr J van den Heever, informing the Regional Manager that he had been monitoring cases with unpaid debit orders in the client portfolio of the Applicant for more than a month. Trends were identified and it was suggested that the cases be referred to Forensic Services for investigation.

 

29.                   On 2 October 2023, Ms Z of Sanlam requested Forensic Services to investigate lapses in the Applicant’s client portfolio.

 

30.                   On 1 November 2023, Sanlam issued a question memo, detailing preliminary findings and irregularities involving specific clients, requiring the Applicant’s response by 10 November 2023.

 

31.                   On 24 November 2023, the Applicant replied to the question memo, outlining irregularities in each case. She claimed that Ms TM had substituted client banking details with her own or that of family members, falsified and duplicated banking details and contact information, and used incorrect details for unauthorised policies to obtain referral/commission fees prior to policy inception. These misrepresentations were done purely in order for Ms TM to earn referral/commission fees, which would have been paid to her in the month these policies issued, which predate the inception date.

 

32.                   On 29 January 2024, Sanlam suspended the Applicant as a Financial Advisor and Authorised Principal of Jage.

 

33.                   At the end of January 2024, the Applicant repaid clawback amounts associated with the investigated clients to Sanlam.

 

34.                   The Applicant appealed her suspension on 1 February 2024, but Sanlam dismissed the appeal on 7 February 2024.

 

35.                   On 13 February 2024, Sanlam emailed the Applicant the Final Investigation Report dated 9 February 2024. This report included an executive summary, findings and recommendations, as well as alleged FAIS General Code of Conduct and the FAIS Act violations. Alongside the report, Sanlam attached a Notice of Intention to Debar the Applicant and to terminate her contract (Possible Debarment with Financial Services Conduct Authority in terms of the FAIS Act), as well as a copy of Sanlam’s debarment process/policy. The Applicant was invited to provide Sanlam with her representations by 19 February 2024.

 

36.                   On 19 February 2024, the Applicant submitted her reply to Sanlam.

 

37.                   On 13 March 2024, Sanlam issued the Applicant with a Contract Termination and Debarment as Representative in the Financial Services Industry letter. Sanlam indicated in the letter that its actions are based on the outcome of the Forensic investigation.

 

38.                   Sanlam notified the Financial Services Conduct Authority (“FSCA”) on 15 March 2024 of the Applicant’s debarment. On 10 April 2024, the FSCA confirmed that the debarment of the Applicant had been recorded.

 

39.                   On 18 March 2024, the Applicant requested copies of the supporting documents upon which the Respondent reached its findings.

 

40.                   On 5 April 2024, Sanlam emailed to the Applicant reasons for their decision. According to the Applicant she had not received the email of 5 April 2024. The subsequent chronology of events pertaining to the email of 5 April 2024 has already been set out above and will not be repeated for brevity’s sake. Sanlam’s response to the Applicant’s request for reasons were emailed to the Applicant on 13 May 2024.

 

41.                   On 20 May 2024, the Applicant filed her application for reconsideration.

 

42.                   On 25 July 2024, the Respondent filed a Notice of Intention to Oppose and its Statement of Reasons with detailed annexures.

 

43.                   On 10 July 2024, the Applicant filed her augmented and supplementary grounds for reconsideration.

 

D.                     Applicant’s Grounds for Reconsideration

 

44.                   The Applicant’s grounds for reconsideration can be summarised as follows:

 

45.                   Non-compliance with procedural fairness requirements in terms of the FAIS Act

 

45.1          Sanlam’s Notice of Intention to Debar and Notice of Debarment are defective and procedurally unfair due to non-compliance with section 14(3)(a) of the FAIS Act. The Applicant contends that the Notice of Intention to Debar failed to specify the grounds and reasons for the Applicant’s debarment, the terms thereof, or the handling of the Applicant’s pending (un-concluded) business matters. While the Notice of Intention to Debar referenced the Final Forensic Report detailing Sanlam’s findings, it did not clearly link the report’s findings to specific grounds rendering the Applicant unfit or in contravention of the FAIS Act. Consequently, the Applicant asserts she was hindered in responding effectively to the Notice of Intention to Debar and the Final Investigation Report, and was left to infer the bases for the Respondent’s conclusions.

 

45.2          The Applicant further claims that the Notice of Intention to Debar omitted the intended debarment duration, allegedly failing to comply with section 14(3)(a)(i) of the FAIS Act.

 

45.3          The Applicant also claims that Sanlam violated section 14(3)(a)(iii) of the FAIS Act, by not affording the Applicant a reasonable opportunity to make representations, as well as its own debarment policy, which provides for a 5 business-day response period, whereas she was only given 4 business days.

 

45.4          The Applicant further claims that the Final Forensic Report accompanying the Notice of Intention to Debar, a four-page document, differs substantially from the detailed amended Final Forensic Report (“the full/new report”) later provided in Sanlam’s Statement of Reasons. This full report included extensive investigative details, client-specific findings, and supporting annexures, which were initially withheld. According to the Applicant, these omissions hindered her ability to investigate and respond thoroughly to the allegations, particularly since the full report introduced additional clients and issues that had not been disclosed initially. The Applicant’s requests for underlying and additional time to prepare representations were denied until these proceedings began, impeding her ability to mount a complete defence.

 

45.5          Furthermore, the final Notice of Debarment allegedly ignored the Applicant’s representations without explanation, which the Applicant claims reflects prejudgment by the Respondent. The Applicant’s request for a meeting with senior management was also declined, and no formal hearing was convened, further underscoring the claim that Sanlam’s process was unfair, unlawful, and highly prejudicial.

 

46.                   Sanlam’s Final Forensic Report is unsubstantial, bad in law and do not support the conclusion to debar Applicant

 

46.1                      The Applicant claims that the only reasonable inference to be drawn from the conclusion reached by Sanlam in the Forensic Report (paragraph 2.1 thereof) that misrepresentations were made when applications for policies were submitted without the knowledge or consent of seven applicants, is that the unauthorised policies were submitted by Ms TM as part of her fraudulent scheme in order to earn additional referral fees, as Ms TM completed the administrative parts of the application process.

 

46.2                      The Applicant claims that when a client applied for more than one product, she understood this to mean that the client had followed her holistic advice on all relevant products. She states that she ensured that the identity on the AEB2007 matched the client she had advice, leaving her no reason to doubt the client’s legitimacy. According to the Applicant, there was no cause for her to suspect any impropriety with multiple policy applications by a single client. The Applicant claims that Sanlam failed to fully consider this reasoning.

 

46.3                      The Applicant submitted that the finding in the Forensic Report that bank account details were mispresented for debit order purposes, potentially with or without the Applicant’s awareness (paragraph 2.2 thereof) and Sanlam’s reliance in support of this finding on section 11 read with section 12 of the General Code of Conduct for its recommendation of termination and debarment, is not correct as it cannot be attributed to the Applicant, because the obligation to comply with section 11 read with section 12, lies with Sanlam as the provider, and not with the Applicant as a representative. Thus, the control objective referred to in section 12 requires the provider – excluding a representative – to structure its internal control measures in such a way so as to provide assurance that financial information used or provided is reliable. Accordingly, the obligation rests on Sanlam as the provider and not on the Applicant as the representative to comply with section 11 read with section 12.

 

46.4                      The Applicant contends that one of the ways Sanlam achieves compliance with sections 11 and 12 is through bank account verifications. When the account details were inserted by Ms TM, Sanlam verified the account details (Autonub process). The presence of a check mark indicated successful verification, and the application process could not have proceeded without it. Once this was done by Sanlam, it was a clear representation to the Applicant that Sanlam was satisfied with the veracity and authenticity of the banking details provided in respect of the client referred to by Ms TM. It is mandatory for the Applicant (and therefore Jage) as a representative of Sanlam to employ Sanlam’s processes when inter alia applications are made and submitted on behalf of clients. Sanlam undertakes its own internal vetting and compliance processes when an application is submitted and before issuing the policy. The Applicant is not privy to this process. As a result, thereof, the Applicant contents that it is wholly unreasonable and unconscionable to expect of her to have somehow detected any falsification or misrepresentation of bank account details, particularly as they were verified and approved by Sanlam at the time of the applications.

 

46.5                      The Applicant claims that Sanlam’s process, including the Autonub verification used by Sanlam, provide reasonable safeguards against financial loss. The Forensic Report notes that while the Applicant earned R 229,070.19 in commission from Ms TM’s referrals, the policies lapsed, and the entire commission was clawed back by Sanlam, fully covered by the Applicant. Therefore, Sanlam cannot reasonably debar the Applicant for improper commission when its clawback mechanism fully recovers the commission paid.

 

46.6                      The Applicant states that the Forensic Report concludes that Ms TM, not the Applicant (“unlikely that Ms Ganess completed the application documentation under investigation – paragraph 2.3 of Forensic Report) completed the applications, although the Applicant signed as an intermediary and therefore cannot distance herself from the misrepresentation made to Sanlam. It is submitted by the Applicant that this finding does not implicate her in the misrepresentations, that Sanlam has failed to adequately apply its mind to it and give it adequate weight, that the finding supports the explanation that the Applicant was in no way involved in or knew of the misrepresentations by Ms TM, and that this is a relevant factor, which should have been of particular importance in Sanlam’s decision to debar the Applicant.

 

46.7                      It is contended by the Applicant that the only documents signed by her as part of the application process is the AEB2007 and the manager declaration. The Applicant denies that she appended her signature to any document on which the client’s banking details appeared, as the banking details of the client/payor do not appear on either the AEB2007 or the manager declaration as these details were added electronically via Autonub after signature by the Applicant. Sanlam’s assertion that the AEB2007 required the Applicant to verify and match identification documents with proxy form details, is a claim introduced only in Sanlam’s Statement of Reasons. The Applicant confirms that she verifies the applicants’ identities.

 

46.8                      The Applicant argues that Sanlam allowed proxies, including Ms TM, to complete and submit applications on behalf of advisors. Thus, it was unreasonable to expect her to verify banking details in each application, especially as the administrative staff were granted proxies specifically for handling these aspects. Therefore, Sanlam’s attempt to hold her liable for Mr TM’s misrepresentation is unfounded.

 

46.9                      The findings in the Final Forensic Report state that two of six applicants reported they had not spoken with the Applicant and the Applicant confirmed that Mr Marais did not request a Retirement Annuity, yet applications for both Funeral and a Retirement Annuity were submitted under his name on the same day. The Applicant maintains that Sanlam Forensics informed her on 22 January 2024 that two clients, Ms Brown and Mr Plaaitjies, stated they never spoke to her or Ms TM (paragraph 2.4(a) of the Forensic Report). The Applicant contested Ms Brown’s claim that she did not speak to her. In support of her contentions, the Applicant submits that on 16 October 2023, Sanlam notified her of a third-party inquiry on Ms Brown’s portfolio, prompting her assistance to reach out. Ms Brown requested a follow- up, implying consent to the policies in question. This contradicts her later denial of communication with the Applicant, suggesting her possible involvement in Ms TM’s fraudulent scheme. The Applicant states that Sanlam neglected to assess client credibility, considering Ms TM’s relationship with some clients and their potential involvement in the fraud.

 

46.10                  Regarding paragraph 2.4(b) of the Final Forensic Report, where it is stated that Mr Marais had informed the Applicant during her internal investigation that he only authorized funeral cover, not a retirement annuity, although both applications were submitted, the Applicant states that when both applications were filed, she reasonably assumed Mr Marais has accepted her advice, so she signed off on both. According to the Applicant, the Forensic Report’s characterisation in paragraph 2.4(b) misrepresents her understanding, falsely suggesting she knew Mr Marais had not authorized the annuity at the sign-off stage. She submits she only learned this after her internal investigation. In support of the Applicant’s contentions, she attached an affidavit deposed to by Mr Marais.

 

46.11                  The Applicant denies the findings in the Forensic Report (paragraph 2.4) that in all probability she allowed Ms TM, who was not registered as a Sanlam representative, to render advice and intermediary services. The Applicant provided a comprehensive response, asserting that she personally provided all advice, with no involvement from Ms TM. This was supported by an interview with Ms TM, who confirmed that she did not act as an advisor. It is submitted by the Applicant that Sanlam’s conclusion that she allowed Ms TM to render advice lacks logic and cogency, relying on assumptions unsupported by facts.

 

46.12                  Regarding paragraph 2.6 of the Forensic Report, the Applicant states that all commission on these policies was later clawed back from her, meaning that Sanlam incurred no loss, and that any financial detriment was borne by her alone.

 

46.13                  In light of the above, the Applicant contends that the decision to debar her is legally unsound and unsupported by Sanlam’s forensic findings.

 

47.                   Denial of Alleged Contractual Breaches

 

47.1            The Applicant disputes that she breached clause 2.5 of her advisor contract by permitting her proxy, Ms TM, an unqualified individual, to assist her in rendering financial and intermediary services. She asserts that she personally rendered all services, a claim echoed by Ms TM, who confirmed in a telephonic interview with the Forensic Services on 17 January 2024 that she did not act as an advisor.

 

47.2            The Applicant also denies Sanlam’s allegation of breaching clause 4.8 of the advisor contract that she shared sales remuneration with Ms TM. She maintains that clause 4.8 of the contract prohibits sharing remuneration only with Jage and states that she never shared commission with Jage. Instead, she contends that the payment to Ms TM was a referral fee, a personal arrangement that, in her view, aligns with industry practice. She asserts that Sanlam’s reliance on email correspondence dated 24 August 2023 is misplaced. The phrases in the email referring to Ms TM “submitting business/cases” and “earning commission” were simply internal jargon and did not imply Ms TM was acting as a financial advisor. The “cases” refer to the business referred by Ms TM, and the “commission” refers to the referral fees for these referrals.

 

47.3            The Applicant contests Sanlam’s claim that she violated clauses 4.17 and 7 of the advisor contract by delegating her rights or obligations to Ms TM by allowing her to act as an intermediary. She highlights that Sanlam Forensics found no evidence of Ms TM acting as an intermediary, rendering this claim unfounded.

 

47.4            The Applicant further contends that Ms TM only performed administrative tasks that did not involve any judgment or guidance on financial products, meaning she did not breach any contractual provision. She argues that any alleged breach would not justify declaring her unfit or improper.

 

48.                   Sanlam’s alleged grounds for debarment & Applicant’s Contentions on the Final Forensic Report

 

48.1                      The Applicant disputes Sanlam’s grounds for debarment, arguing that supervising basic administrative tasks is not part of her role and emphasizing she did not certify bank details.

 

48.2                      The Applicant point out that the Final Forensic Report revealed client involvement in fraud, which Sanlam’s initial report failed to disclose, depriving her of a fair response before the debarment. Additionally, evidence showed Ms TM’s fraudulent use of bank details.

 

49.                   Other Important Considerations

 

49.1                      The Applicant highlights her 15-year unblemished record in the financial services industry, maintaining a strong professional reputation without any past disciplinary actions.

 

49.2                      Upon identifying irregularities, she disclosed them voluntarily on 29 September 2023 and acted swiftly to prevent fraud by questioning Ms TM and ensuring oversight in all future communications.

 

49.3                      Sanlam’s termination of her advisor contract and debarment had a severe impact on her, forcing her to close her business, lay off employees, and face financial hardship as she is now unable to work in her profession.

 

49.4                      Despite full cooperation during the investigation, she experienced procedural unfairness and incurred substantial legal costs, for which she seeks compensation in this application.

 

E.                     Sanlam’s Grounds for Debarment and Termination of Contract

 

50.                   Sanlam asserts that the debarment process followed all legal protocols as stipulated in section 14 of the FAIS Act, contending that the Applicant was given ample opportunity to present her case, and that the issued notice satisfied all procedural requirements.

 

51.                   Sanlam argues that the Applicant cannot distance herself from Ms TM’s actions, as the fraudulent scheme was executed by Ms TM, who was employed under the Applicant’s authority and control.

 

52.                   Sanlam maintains that the Final Forensic Report provides substantial evidence of misconduct, including unauthorised policy submissions and falsified banking details, for which the Applicant bears ultimate responsibility. The report indicates that the Applicant failed to meet her obligations under the FAIS Act and the General Code of Conduct by outsourcing/delegating tasks to an unregistered and unauthorised individual, rendering her unfit to act as a representative.

 

53.                   Sanlam contends there is credible evidence from the Forensic Services findings that the Applicant materially violated the FAIS Act. Citing Part 2(2) of the General Code of Conduct, Sanlam’s claims that the Applicant acted dishonestly by asserting she personally engaged with each client. However, the forensic investigation revealed that two of the six contacted clients confirmed they had never spoken with the Applicant.

 

54.                   Additionally, Sanlam cites section 7(1) of the FAIS Act, asserting that the Applicant allowed Ms TM, who was unauthorised, to assist in rending financial and intermediary services. This constitutes a failure to fulfil her obligations as an authorised representative.

 

55.                   Sanlam referenced section 11 of the General Code of Conduct, arguing that the Applicant was responsible for preventing fraudulent activities. Her failure to do so, according to the Respondent, breached the Code’s standards.

 

56.                   Sanlam further contends that the Applicant’s actions violated multiple contractual obligations, undermining the advisory relationship and potentially exposing Sanlam to liability.

 

57.                   Sanlam further argues that the Applicant breached her advisor contract by sharing remuneration with Ms TM without authorisation, which constitutes a clear violation of contract terms.

 

58.                   Moreover, Sanlam argues that the Applicant neglected her contractual obligations by permitting Ms TM to assist in providing financial services. Sanlam considers it implausible and incorrect for the Applicant to suggest she can distance herself from the conduct that resulted in misrepresentation.

 

59.                   Sanlam further contends that the Applicant breached the terms set forth in the proxy form signed in her capacity as an intermediary.

 

60.                   In conclusion, Sanlam submits there are reasonable grounds supporting the Applicant’s debarment as she no longer meets the requirements of section 13(2)(a) of the FAIS Act, having materially contravened its provisions.

 

F.                      Tribunal’s Analysis and Decision

 

61.                   As stated above, Sanlam debarred the Applicant on the grounds of materially contravening the FAIS Act, asserting that she no longer meets the requirements of section 13(2)(a) and is no longer fit and proper to act as a representative. This decision is based on an internal investigation and further grounded in section 7(1) of the FAIS Act, as well as Part (2)(2) of the General Code of Conduct. Additionally, Sanlam cites section 11 of the General Code of Conduct, alleging that the Applicant failed to meet her obligations in terms of this section. Sanlam also claims that the Applicant breached specific terms of her advisor contract and violated provisions of the AEB2007, particularly the declaration in the proxy form.

 

62.                   The Applicant’s application for reconsideration is based on three main points: procedural irregularities, lack of a causal link to any misrepresentations made to Sanlam, and the errors in the Forensic Report, which she claims renders it legally flawed and does not substantiate her debarment. The Applicant acknowledges the occurrence of irregularities and fraud involving policies referred by Ms TM, but denies any involvement, asserting that she was unaware and cannot be held accountable. At all relevant times, the Applicant was an Authorised Principal and representative.

 

63.                   Procedural Requirements in terms of section 14 of the FAIS Act

 

64.                   Section 14(2)(a) of the FAIS Act provides as follows: “Before a provider effect a debarment in terms of subsection (1), the provider must ensure that the debarment process is lawful, reasonable and procedurally fair.”

 

65.                   Section 14(3) of the FAIS Act provides:

 

“(3)  A financial services provide must-

 

(a)                     before debarring a person-

 

(i)                 give adequate notice in writing to the person stating its intention to debar the person, the grounds and reasons for the debarment, and any terms attached to the debarment, including, in relation to un-concluded business, any measures stipulated for the protection of the interests of clients;

 

(ii)                provide the person with a copy of the financial services provider’s written policy and procedure governing the debarment process; and

 

(iii)              give the person a reasonable opportunity to make a submission in response;

 

(b)                    consider any response provided in terms of paragraph (a)(iii), and then take a decision in terms of subsection (1); and

 

(c)                    Immediately notify the person in writing of-

 

(i)              the financial services provider’s decision;

 

(ii)             the person’s rights in terms of Chapter 15 of the Financial Sector Regulation Act; and

 

(iii)            any formal requirements in respect of proceedings for the reconsideration of the decision by the Tribunal.”

 

66.                       The Applicant contends that the Notice of Intention to Debar and the Debarment Notice are defective and procedurally unfair due to non-compliance with section 14(3) of the FAIS Act. Specifically, the Notice of Intention to Debar lacked clarity on the grounds and reasons for debarment, its terms, and how the Applicant’s pending (un- concluded) business would be handled. Although the Notice of Intention to Debar referenced a Final Forensic Report, it did not explicitly link the findings to the grounds of unfitness or the FAIS Act and General Code of Conduct violations. The Applicant claims that this lack of detail impeded her ability to respond effectively. Additionally, the Applicant notes that she was given only four business days to respond – short of the five days stipulated in the Respondent’s policy, thus preventing her responding fully as she was not granted sufficient time to respond. The Applicant claims that the Final Forensic Report included with the Notice of Intention to Debar significantly differed from the detailed amended report later provided in the Respondent’s Statement of Reasons. This complete report contained extensive investigation details, client-specific findings, and supporting annexures, that were initially omitted, which the Applicant argues limited her ability to fully investigate and respond meaningfully to the allegations. The Applicant also asserts that her representations were ignored, and no formal hearing was held.

 

67.                       In perusing the evidence presented, the Tribunal finds that nothing was established to gainsay Sanlam’s version that the debarment procedure was procedurally fair for the following reasons:

 

67.1                      The process followed is detailed in paragraphs 14 to 42 above and are herein incorporated by reference. The Applicant admitted awareness of back-office irregularities, claimed client engagement, and should have known the clients involved if proper records were kept. She confirmed receiving unpaid debit order notifications and acknowledged claw-back payments, indicating knowledge of affected clients and policies. Her internal investigation showed irregularities, which she reported to Sanlam, demonstrating her awareness of lapsed policies. She also responded in detail to Sanlam’s question memo, which listed 21 affected clients and described the issues. Although aware, she blamed Ms TM, denying responsibility despite the irregularities occurring under her supervision. Therefore, any claim by the Applicant that she did not have knowledge of the case against her and did not have an opportunity to respond comprehensively to the clients referenced in the final report, attached to Sanlam’s Statement of Reasons, is unfounded.

 

67.2                      The Applicant’s claim that she voluntarily disclosed the irregularities as a mitigating factor is weakened by the fact that Sanlam had already been monitoring her client portfolio for unpaid debit orders for over a month before she reported the issue.

 

67.3                      The record shows that the Applicant had ample opportunities to present her case. She had an opportunity to respond to Sanlam’s question memo by 10 November 2023, which outlined preliminary findings and irregularities in specific client cases. She only filed a response on 24 November 2023. However, she did not even assume responsibility, but instead attributes blame on Ms TM.

 

67.4                      When the Applicant was suspended, she appealed the decision, which afforded her another opportunity to state her case.

 

67.5                      On 13 February 2024, Sanlam issued the Applicant a Notice of Intention to Debar and to terminate her contract, as well as a copy of Sanlam’s debarment policy. Attached was the Final Investigation Report dated 9 February 2024, including an executive summary, findings and recommended remedial actions.

 

67.6                      Paragraph 3 of the notice states that Sanlam continued its investigation into the Applicant’s alleged misconduct, which included violations of the FAIS Act and Sanlam’s Code of Ethical Conduct. Sanlam’s statement, accepted by the Tribunal, intimate that the investigation was ongoing, explaining the differences between the initial and final investigation reports. As more policies lapsed, new cases arose, leading to an expanded report, which explains the more comprehensive report filed later. The Respondent’s Statement of Reasons, including the comprehensive report, was filed on 25 June 2024. On 10 July 2024, the Applicant submitted detailed supplementary grounds for reconsideration, addressing the findings in Sanlam’s comprehensive report. The Applicant was given a fair opportunity to respond, and the Tribunal, which can conduct a full re-hearing, considered these submissions. Therefore, the Applicant’s claim of being unable to fully respond due to the timing of the final investigation report lacks merit.

 

67.7                      Paragraph 4 of the notice states that, due to the seriousness of the allegations, Sanlam believed the Applicant might be unfit to act as a financial service provider or representative, which is a ground for debarment.

 

67.8                      The reasons for debarment clearly appeared from the final investigation report, attached to the Notice of Intention to Debar. The notice referenced the final investigation report as an integral part. Additionally, paragraph 4 of Sanlam’s debarment policy confirmed that the final report guides those responsible for evaluating the representative’s conduct, ensuring compliance with the policy. The final report clearly outlined the grounds and reasons for debarment, citing specific sections of the FAIS Act, the General Code of Conduct, and the alleged breach of the advisor contract. Paragraphs 2.1 to 2.6 of the final report outlined the misconduct, referencing unauthorised policy submissions, falsified banking details, misrepresentations and the alleged rendering of advice by an unauthorised person.

 

67.9                      Misconduct was established and not disputed by the Applicant, who distanced herself by blaming Ms TM, who worked under her supervision.

 

67.10                  Therefore, the claim that the notice failed to state the grounds and reasons for debarment is unfounded. A copy of the Respondent’s debarment policy and procedure was provided to the Applicant, and the notice included the intention to debar the Applicant.

 

67.11                  In response to the Applicant’s claim that the notice did not specify the terms or duration of the debarment: paragraph 5 of the notice clearly stated the terms of the debarment namely that the Applicant’s name would be placed on a register of debarred representatives, prohibiting her from providing financial advice or intermediary services, and terminating her advisor contract. As for the duration, the FIAS Act does not empower a financial services provider to determine the duration of the debarment. Only the Registrar of the Financial Sector Conduct Authority (“FSCA”) is empowered as such.

 

67.12                  The Tribunal notes that the notice allowed the Applicant until 19 February 2024, to respond, which she did. Therefore, her claim of not being given an opportunity to respond is unfounded. Although the response period was 4 business days instead of the 5 days stipulated in the Sanlam’s debarment policy, this period included a weekend. Considering the Applicant’s familiarity with the affected clients and policies, as well as her own investigation, the Tribunal is satisfied that she had sufficient time and information to respond fully to the allegations raised in the investigation report and the Notice of Intention to Debar. To the Tribunal’s enquiry the Applicant’s Counsel conceded that nothing material was omitted in her response. No prejudice could therefore have resulted.

 

67.13                  Sanlam is not obliged to provide the Applicant with private and confidential supporting documents/information from its investigation. However, the full Final Investigation Report and its annexures were subsequently provided, and the Applicant had adequate opportunity to respond. That she did. Additionally, the Applicant was given the chance to address the misconduct and irregularities when responding to Sanlam’s question memo on 24 November 2023, to a Forensic Services request for further information on 11 December 2023, and on 22 January 2024, when responding to new irregularities identified after two clients confirmed they had not applied for policies or interacted with the Applicant (response filed 23 January 2024).

 

67.14                  The Applicant’s claim that her submissions were not considered is unfounded. The Notice of Intention to Debar explicitly invited the Applicant to submit written representations due to the serious nature of the potential termination and debarment. This invitation indicates that Sanlam’s decision was contingent on her input. The Debarment Notice, issued on 13 March 2024, confirmed that Sanlam considered the forensic investigation recommendations, the Applicant’s written submissions, and SanlamConnect Compliance’s recommendations before reaching a decision.

 

67.15                  While there is no specific evidence on how Sanlam will handle the Applicant’s uncompleted business, it is reasonable to assume that clients can be contacted through its electronic system to ensure policy continuity, as the Applicant stated that all clients contact details were uploaded onto this system. This absence of detailed information does not undermine the validity of the debarment process, as Sanlam complied substantively with the FAIS Act’s debarment procedural requirements.

 

67.16                  The Applicant’s claim that the process followed is defective as no formal hearing was held is without merit, because section 14 of the FAIS Act does not prescribe an oral hearing for debarment.

 

67.17                  Based on the above reasons, the Tribunal concludes that the Applicant’s claim of an unfair and defective debarment process is devoid of merit.

 

68.                       Analysis of Applicant’s additional grounds for reconsideration

 

69.                       To consider the Applicant’s additional grounds for reconsideration, it is essential to examine Sanlam’s grounds for debarment. These include material contraventions of the FAIS Act and the General Code of Conduct, as well as breaches of the Applicant’s contractual obligations under her advisor contract. Contractual breaches that also amounts to a material contravention of the FAIS Act can serve as valid grounds for debarment.

 

70.                       The investigation report cited Part 2(2) of the General Code of Conduct, which states:

 

“A provider and its representatives and key individuals must at all times render financial services honestly, fairly, and with due skill, care and diligence, and in the interests of clients and the integrity of the financial services industry.”

 

71.                       While the Applicant claimed personal engagement with each client, the investigation found that that two of the six contacted clients had not spoken to her. Although she provided clarification for one client, she failed to verify engagement with the other, demonstrating dishonesty and misrepresentation, undermining the trust and transparency required of an Authorised Principal and representative.

 

72.                       In Mr Marais’ case, referenced in Sanlam’s report, the Applicant approved an additional Retirement Annuity that the client did not request, contrary to his clear instructions for a Top Cover Plan (funeral cover). Both applications were approved on the 17 March 2023, at 11h41 and 12h30, despite the Applicant knowing the client’s actual request. Mr Marais confirmed in an affidavit that he explicitly informed the Applicant during a 2023 meeting that he only wanted funeral cover with Sanlam. The Applicant’s approval of both applications, without verifying the client’s consent through direct contact, demonstrated a failure to exercise due care and diligence as expected of a representative. By shifting the responsibility to Ms TM, without confirming the client’s consent, the Applicant failed to act in the client’s best interest and materially violated the General Code of Conduct, justifying her debarment.

 

73.                       The Applicant argues that the forensic report mischaracterises her actions regarding Mr Marais and claimed unawareness of the unauthorised applications. However, approving a product not requested by the client implicates dishonesty. Her claim of discovering the unauthorised application only after an internal investigation does not absolve her of responsibility.

 

74.                       Staying with the case of Mr Marais, the Applicant’s claim of holistic financial advice contradicts the client’s specific instructions. Genuine comprehensive guidance would involve thorough due diligence and ensuring all applications were authorised and aligned with the client’s wishes. The Applicant’s outsourcing of her responsibilities to an unauthorised individual further undermines her credibility. Approving multiple products without proper verification reflects a lack of diligence and integrity, justifying debarment.

 

75.                       The Applicant’s failure and inability to pre-emptively identify or suspect irregularities in policy applications is not a valid defence. Financial service providers and representatives must maintain vigilance and scrutiny, especially when discrepancies arise. The Applicant’s conduct not only undermined the trust placed in her by her clients but also contravenes the principles of the General Code of Conduct, which demands honesty, fairness, and due care. This constitutes a material breach of the FAIS Act, justifying her debarment.

 

76.                       By approving the client’s application without his explicit consent, the Applicant disregarded the principles of client consent and violated the General Code of Conduct. The discrepancies between personal information provided during the application stage and the data subsequently uploaded on the system raise concerns about the process accuracy and integrity of the application process. On this ground alone, the reconsideration application should be dismissed.

 

77.                       The Respondent also relies on section 11 of the General Code of Conduct for its debarment which provides:

 

“A provider must at all times have and effectively employ resources, procedure and appropriate technological systems that can reasonably be expected to eliminate as far as reasonably possible, the risk to that clients, product suppliers and other providers or representatives will suffer financial loss through theft, fraud, other dishonest acts, poor administration, negligence, professional misconduct or culpable omissions.”

 

78.                       The General Code of Conduct defines ‘a provider’ as a financial services provider and includes a representative.

 

79.                       Before addressing the alleged violation of section 11 it is necessary to have regard to the Applicant’s argument raised in her heads of argument that section 11 of the General Code of Conduct must be read with section 12, and if read together the obligation solely rest on Sanlam, and not on the Applicant as a representative, to comply with those sections. The argument is misconceived.

 

80.                       In order to address this, we need to reference section 12 of the General Code of Conduct, which provides:

 

“A provider, excluding a representative, must, without limiting the generality of section 11, structure the internal control procedures concerned as to provide reasonable assurance that-

 

(a)              the relevant business can be carried on in an orderly and efficient manner;

 

(b)              financial and other information used or provided by the provider will be reliable; and

 

(c)              all applicable laws are complied with.”

[Own emphasis added]

 

81.                       The phrase ‘without limiting the generality’ in section 12 clarifies that this provision does not restrict the broader application of section 11. It ensures that section 12 is viewed as complementary to, rather than a limitation of, section 11. Thus, section 11 applies to representatives, including the Applicant.

 

82.                       Section 11 of the General Code of Conduct imposes a statutory obligation on financial services providers, such as Sanlam, and their representatives, including the Applicant to implement measures that mitigate financial risks to clients stemming from fraud, theft, negligence, professional misconduct, culpable omissions and other dishonest acts.

 

83.                       While Sanlam has systems in place to mitigate these risks, albeit perhaps imperfectly, the Tribunal found no evidence that the Applicant had any internal measures or procedures to reasonably eliminate risks to clients from fraud, theft, negligence, professional misconduct, culpable omissions and other dishonest acts. The Applicant’s inadequate control over Ms TM’s activities led to fraudulent policy submissions under her advisor code through proxy access, exposing clients to risk and compromising Sanlam’s financial and reputational standing. As an authorised representative, the Applicant was obliged to prevent fraud. Although the Applicant admitted that fraud occurred within her back office, she distanced herself by placing sole blame on Ms TM. However, the Applicant’s failure to supervise Ms TM – who was under her direct oversight and control – does not absolve her of her responsibilities or statutory obligations. The Applicant’s submission that Sanlam suffer no financial loss as all amounts for policies referred by Ms TM who lapsed were clawed back, and therefore section 11 is not applicable, is meritless. A rectification of the misconduct afterwards does not mean that the Respondent cannot proceed with the debarment, especially where material contraventions of the FAIS Act and the General Code of Conduct were established, as in this case. The fact that Sanlam and/or the clients suffered no financial loss is therefore irrelevant. The Applicant’s non-compliance with the General Code of Conduct justifies Sanlam’s actions and highlights the need for measures that uphold the integrity of the financial industry and the protection of clients.

 

84.                       Sanlam further cites section 7(1) of the FAIS Act, which states that no person may act or offer to act as a financial services provider without a valid license issued under section 8, effective from a date set by the Minister and published in the Government Gazette.

 

85.                       The Applicant disputes the findings in the forensic report that she likely allowed Ms TM, who was not a registered representative of Sanlam, to provide advice and intermediary services. She argued that she personally delivered all advice without Ms TM’s involvement, supported by an interview with Ms TM confirming she did not act as an advisor. The Applicant contends that Sanlam’s conclusions lack logic and evidence, being based on unsupported assumptions.

 

86.                       The Applicant’s explanation that Ms TM, an insurance administrator and unauthorised person, assisted clients at her brother’s bottle store provides substantial prima facie evidence that she helped the Applicant deliver these services. It further appears from an email dated 24 August 2023, that Ms TM ‘submitted cases/business and earned commission’ as well as that Ms TM had specific ‘targets’ to achieve, which indicates that Ms TM, an unauthorised person, provided financial services. This indicates the Applicant’s non-compliance with her legal duties under section 7(1) of the FAIS Act, justifying her debarment.

 

87.                       The Applicant contends that the Forensic Report indicated that Ms TM, rather than her, completed the disputed application forms, and that this conclusion did not implicate her in any misrepresentations, a point not allegedly considered by Sanlam before debarment. However, the Tribunal’s finds this irrelevant to the Applicant’s material non-compliance with the FAIS Act and the General Code of Conduct. Consequently, the Tribunal upholds the Applicant’s debarment.

 

88.                       For reasons stated above, the Tribunal finds that Sanlam’s Final Forensic Report substantially supports the decision to debar the Applicant.

 

89.                       Sanlam argues that the Applicant breached her advisor contract, specifically clause 4.8, which states that the Applicant is prohibited from sharing any sales remuneration with Jage. Jage is a legal entity (business) comprising the Applicant and all its employees. Therefore, the Applicant is not allowed to share her remuneration with Ms TM, an employee. This defeats/contradicts the Applicant’s argument that she was only prohibited from sharing her remuneration with Jage.

 

90.                       While the Applicant’s contract does not define ‘remuneration’, it can be interpreted through the Management Outsourced Business BlueStar Business contract referenced in the Applicant’s agreement. Clause 2.21 defines ‘remuneration’ as the applicable remuneration which Sanlam pays the advisor and associate advisor in return for the successful sale of a product.

 

91.                       Ms TM was neither an advisor nor an associate advisor and therefore, the Applicant was prohibited from sharing her sales remuneration with her.

 

92.                       The Tribunal found that although Sanlam had systems to mitigate risks, the Applicant lacked internal measures to protect clients from fraud, theft, negligence, and misconduct. The Applicant’s failure to supervise Ms TM led to fraudulent policy submissions under her advisor code, exposing clients to risk and harming the Respondent’s reputation. While the Applicant admitted fraud occurred, she solely blamed Ms TM. However, the Applicant’s lack of oversight does not absolve her of her responsibilities. The argument that no financial loss negates section 11 is meritless, as post-misconduct rectification/corrections do not prevent debarment for violations of the FAIS Act and the General Code of Conduct. The Applicant’s non-compliance justifies Sanlam’s actions, regardless of the financial impact.

 

93.                       The Applicant’s sharing of her remuneration/commission with Ms TM is evidenced by an email dated 24 August 2023, where the Applicant stated: “Your emails suggest that submitting business is a favour to me, but it is not. Allowing you to submit cases and earn commission is a favour to you, primarily to help you repay me quickly. If this arrangement no longer works for you, we can revert to a salary deduction of R10 000 per month. Your goals for an associate contract are your responsibility and have nothing to do with me. This too is a favour, as I would essentially carry your targets and lapses.”

 

94.                   Based on this evidence, the Tribunal rejects the Applicant’s claim that the terms “submitting business/cases” and “earning commission” were simply internal jargon without implying that Ms TM acted as a financial advisor, or that “cases” referred to the business referred by Ms TM and “commission” to referral fees. A referral fee is effectively a commission. Even if the Tribunal accepted it as a referral fee, the Applicant would still be in breach of section 4.16 of her advisor contract, which states: “A referral fee, as outlined in the Sanlam’s ‘Referral Fees Policy’, is paid once a recruit is appointed as an advisor.” The evidence shows Ms TM was tasked by the Applicant with obtaining client leads but was never appointed as an advisor or provided recruitment leads. Therefore, the Applicant’s assertion that payments to Ms TM were a personal arrangement contradicts the contract’s provisions.

 

95.                   Sanlam also argues that the Applicant breached clause 4.7 of her advisor contract, which states: “The clients to whom you render advisory and intermediary services, whether existing or new, are considered your clients by Sanlam Life while you are the AP of the MO BlueStar Business.” When Forensic Services inquired about 13 policies with invalid bank details, the Applicant noted that 62 of the 89 applications were referred by Ms TM. The Applicant paid Ms TM substantial amounts for procuring these clients. The Applicant’s attempt to distance herself from the misrepresentations allegedly made solely by Ms TM is weakened by clause 4.7, which holds the Applicant responsible for all clients, including those referred by Ms TM. Thus, the Applicant breached her responsibilities in terms of clause 4.7 of her advisor contract.

 

96.                   It is clear from the evidence that the Applicant breached clause 2.5 of her advisor contract, which provides: “You must be accredited in order to perform your functions...you will be accredited if you have the required knowledge and skills to provide financial advice and recommend appropriate Products...”

 

97.                   The Applicant breached this clause by permitting her proxy, Ms TM, to assist in rendering financial services. Ms TM was not accredited or authorised to provide such services, and the Applicant’s delegation of her responsibilities to an unqualified individual constitutes a direct violation of the accreditation requirement set out in her advisor contract. This also amounts to a material non-compliance of the FAIS Act which obliges persons to be authorised to render financial services on behalf of a provider.

 

98.                   It is clear from the evidence that the Applicant further breached clause 7 of her advisor agreement. The reasons therefore had already been stated. The Applicant also breached clause 8.1 of the Management Outsourced BlueStar Business Contract, referenced in her main contract. The Applicant was the main liaison between Jage and the Respondent, which highlights her responsibility for Ms TM’s, a third party and external participant, who had no knowledge of Sanlam’s internal operations, actions.

 

99.                   In terms of the Applicant’s advisor contract, she was obliged to ensure that any information from Ms TM was truthful and aligned with Sanlam’s and the clients’ best interests, a duty arising from her role as the appointed representative. There is no evidence that the Applicant complied with these obligations.

 

100.               The Applicant was not simply a victim of Ms TM’s fraudulent actions, but by her own account, acted as a passive enabler, creating an environment where such unlawful activities could occur using her intermediary code.

 

101.               Sanlam also claims that the Applicant breached her duties under the AEB2007, particularly the proxy form (part 4, page 3) which explicitly states that the intermediary has to disclose product quotations to the applicants. On the Applicant’s own version, she states that she provided ‘holistic advice on various financial products’. There is no evidence on the record that the Applicant complied with the signed declaration neither was it confirmed in the forensic report.

 

102.               Sanlam referenced a disclaimer in the “Manage Proxies” section, which mandates the Applicant to control proxy user access and ensure proper use of Sanlam’s applications. The disclaimer indicates that the Applicant is fully responsible for her proxies’ actions and must revoke access as needed. An audit revealed discrepancies in 9 client applications, implying a failure to verify client data as required by the proxy form. The Applicant acknowledged that her proxy, Ms TM, was responsible for obtaining identity documents, showing the Applicant’s reliance on her proxy for mandated tasks. This delegation breached the Applicant’s obligations under the proxy form and demonstrated a failure to oversee her proxy’s actions. The Applicant’s statement that she only became aware of the irregularities upon receiving non-payment notifications further supports this finding. In her response dated 23 November 2024, the Applicant confirmed that Ms TM was tasked with obtaining identity documents during client meetings, underscoring her overreliance on her proxy for duties she was personally required to perform. Although the Applicant claimed that she verified clients’ identity documents during the signing of declarations, there is no evidence of her managing or monitoring the applications processed by Ms TM. Consequently, these irregularities occurred due to the Applicant’s lack of oversight.

 

103.               Sanlam explains its Autonub system’s functionality, which allows future-dated premiums. The Applicant, as an intermediary, was trained to ensure that the start dates were not set too far into the future, as this would disqualify clients from receiving free cover. The evidence shows that all affected policies were future dated (3 to 4 months from issuance to inception). There is no indication that the Applicant verified, monitored, or managed the policies submitted by her proxy, Ms TM. It is important to note that the Applicant received compensation for new business submitted under her code; despite claiming it was not submitted by her.

 

104.               The Tribunal also considered the Applicant’s personal circumstances. The Applicant is not without remedy, as section 13(1)(b)(ii) of the FAIS Act, read with BN 82, allows for the re- appointment of a debarred representative under particular circumstances.

 

105.               For reasons stated above, the Tribunal is satisfied that Sanlam’s debarment of the Applicant and the termination of her advisor’s contract are justified.

 

G.                    Order

 

1.              The Applicant’s Reconsideration Applicant is dismissed.

 

SIGNED on behalf of the Tribunal on this 15^th day of NOVEMBER 2024.

 

ADV SALMÉ MARITZ

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