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THE FINANCIAL SERVICES TRIBUNAL

 

CASE NO: A15/2024

 

In the matter between:
MZIWAMADODA IGNATIOUS MKHUMA	Applicant
And
FINANCIAL SECTOR CONDUCT AUTHORITY	Respondent

 

Summary: Reconsideration of a decision of the Financial Sector Conduct Authority in terms of Section 230 of the Financial Sector Regulation Act 9 of 2017

 

DECISION

 

INTRODUCTION

 

1.                    The Applicant is MZIWAMAMADODA IGNATIOUS MKHUMA, (“the Applicant”).

 

2.                    The Respondent is the FINANCIAL SECTOR CONDUCT AUTHORITY (“the FSCA”).

 

3.                    This is an application brought by the Applicant in terms of section 230 of the Financial Sector Regulation Act 9 of 2017 (“the FSR Act”) against the decision of the FSCA dated 27 June 2024.

 

FACTUAL BACKROUND

 

4.                    On or about 01 April 2023, Muzi Consulting Agency (Pty) Ltd (“MCA”), brought an application for a licence to be authorised as a Financial Services Provider (“FSP”) in terms of section 8(1) of the Financial Advisory and Intermediary Act, No 37 of 2002 (“the FAIS Act”), for consideration and approval by the FSCA.

 

5.                    As part of the licence application requirements, the director/s of MCA were required to complete forms FSP 4B and 4D which required information pertaining to the fitness and propriety of MCA’s director/s. The Applicant in his capacity as the director of MCA completed the aforesaid forms and responded by ticking “YES” to questions which inter alia enquired about his previous dishonest conduct and prohibition by the FSCA and other regulatory bodies from operating in the financial services industry.

 

6.                    In terms of sections 2 and 5 of FSP 4B and 4D respectively if the answer to any of the questions under these sections was YES, the Applicant was enjoined to provide a full explanation and all information in a separate annexure and attach to the application form. The Applicant failed to provide a full explanation and all information pertaining to his positive response to the aforesaid questions as required.

 

7.                    On 07 August 2023, the FSCA addressed a letter to the Applicant requesting him to provide a full explanation and provide all relevant information pertaining to the answers he gave to questions raised in section 5 of the FSP 4D form. The Applicant was requested to furnish the response on or before 14 August 2023.

 

8.                    On or about 28 September 2023, the Applicant submitted a document titled “FEEDBACK ON HONESTY AND GOOD STANDING” wherein he sought to provide an explanation regarding matters of his past misconduct arising from his “YES” responses to the above sections 2 and 5 of forms FSP 4B and 4D. The Applicant disclosed two complaints that were lodged against him by clients during 2008 and 2012 while was a representative of Carlton Brokers CC and Musa Properties CC (“Musa Properties”) respectively. In both instances, the complainants alleged that they never took policies for which premiums were debited against their accounts.

 

9.                    In particular, the Applicant indicated that while working for Musa Properties in 2012, he advised a client about the need to take a Funeral Plan and the client signed an incomplete application form. He took the client’s signed proposal form home to complete same, and the client gave him all the outstanding details via phone call. The application was accepted by Sanlam Sky, and he was paid his commission. However, he was later advised by the client that she never received her policy documents and no premiums were being deducted. He was confused as the records showed that the policy was in force, and he was paid the commission.

 

10.                The Applicant further alleged that a complaint was subsequently lodged against him by a client who complained that she had a policy she never took from the Applicant. In his explanation, the Applicant alleges that he only realised after the complaint that in error he confused clients’ details. Both clients according to him, had same initials and surname. Upon discovering the error, he got the clients together, explained the error to them and apologised. The complainant after allegedly understanding, wrote a letter of retracting the complaint.

 

11.                On 09 November 2023, the FSCA addressed an email to the director of Musa Properties as the entity that debarred the Applicant requesting it to provide the FSCA on or before 16 November 2023, with a detailed account of the facts including the grounds /reasons pertaining to the debarment.

 

12.                On 15 November 2023, Mr MK Musa Properties responded by indicating that it had initiated the debarment of the Applicant after a client logged a complaint to Old Mutual that she never signed for a policy that was submitted by the Applicant. He called the client and requested for a sample of signatures which differed from the application that was submitted by the Applicant.

 

13.                On 16 November 2023, per email , the FSCA requested the Applicant to furnish FSCA with the letter that the complainant wrote to retract the complaint alternatively to provide the FSCA with the contact details of the complainant or the consultant he communicated with from Sanlam. The Applicant in his response by e-mail on 16 November 2023 stated that he cannot trace the letter from the client as this took place during the time he was not fully aware about what steps he should take and what documents he should keep.

 

14.                On 01 December 2023, the FSCA addressed an email to Sanlam Skye inter alia, requesting assistance with any information that can help the FSCA establish more facts on the debarment of the Applicant including proof of the retraction of the complaint by the complainant. On 12 December 2023, Sanlam Skye provided the FSCA with information from its Forensic Department, which included an affidavit from Ms PMMdated 27 June 2012 and minutes or record of the disciplinary hearing dated 10 October 2012 chaired by Mr MK from Musa Properties.

 

15.                In her affidavit, Ms PMM sought an immediate cancellation of unauthorised stop order on her salary as she had not made any agreement regarding the policy (policy number SG ..0) or stop order.

 

16.                According to the minutes of the hearing, it was put to the Applicant that Ms PMM wrote a letter to Sanlam complaining about deductions on her salary for a policy she never signed for, which was submitted by the Applicant under his code for which he received commission. In response, the Applicant agreed that Ms PMM did take the policy with him, and he had started speaking with her from November 2011. As she could not reach their office easily, when she arrived at the offices she did not have enough time as she was rushing for the transport but she gave him all the documents including beneficiaries and he also advised her on the premium and other policies. He further indicated that Ms PMM signed for the policy.

 

17.                The Applicant further testified during the hearing that he did not give Ms PMM proper advice and did not give her time to think and space to understand the policy enough as she thought that it was just like changing the policy. He alleged that Ms PMM came back after she wrote a letter to Sanlam and he did apologise to her because she was not happy.

 

18.                Subsequent to the receipt of the aforesaid information from Sanlam Skye, the FSCA on 31 January 2024, advised the Applicant that they were concerned about the fact that the information he disclosed to them is different to the information that is on the Applicant’s disciplinary hearing records and that is of a material and significant concern to them. The Applicant was further advised that the information also impacts on his honesty, integrity and good standing and they view it in a serious light. The Applicant was informed that they are going to recommend to the EXCO that his application be declined. The Applicant was afforded an opportunity to advise FSCA on how he would address the allegations arising from the information received from Sanlam Skye in writing before 07 February 2024, failing which, it would be recommended that his application be declined.

 

19.                On 2 February 2024, the Applicant provided a response inter alia stating that he sincerely apologised for submitting questionable information that raises concerns and questions regarding his honesty, integrity and good standing. He undertook to address his “bad actions” as fully indicated in his response dated 02 February 2024.

20.                On 26 June 2024, the FSCA after having considered the information from the Applicant, Sanlam Skye and Musa Properties was of the view that the Applicant was dishonest when providing an account of what happened. The FSCA was not satisfied that the Applicant complies with the fit and proper requirements relating to honesty, integrity and good standing outlined in chapter 2 of the Board Notice and the application was therefore declined. He was also advised of his rights to apply to this Tribunal for a reconsideration of the decision of the FSCA in terms of section 230 of the FSR Act.

 

APPLICANT’S APPLICATION FOR RECONSIDERATION

 

21.                The Applicant lodged an application for reconsideration dated 16 July 2024. In his application for reconsideration, the Applicant complains that after having made the submission as requested by the FSCA as per the e-mail dated 31 January 2024, such submissions appear not to have been taken into account. He further alleges that he was not given the opportunity to read what Mr MK or his clerk wrote and after signing the contents of hearing records , he was not given the copy thereof. He complains that he relied on Mr MK to help him during the hearing.

 

22.                The Applicant’s request for his application to be reconsidered was based on the following:

 

“5.11.1 The FSCA to contact the complainant to verify what I wrote about what happened to lead to my debarment”

 

5.11.2          I am rehabilitated

 

5.11.3          The complainant has been placed back in the position that she was had it not been for my misconduct

 

5.11.4          The FSCA’s findings are based on incomplete findings and has used the fact that I requested to be exempted from submitting a reference as means to add weight on declining my application as he overlooked the fact that my previous employers showed unwillingness to help me.

 

5.11.5          To consider Annexure “A” and “A1” and “VHA3”

 

23.                The Applicant finally requests that the decision of the FSCA be reconsidered and that he be deemed to be rehabilitated considering the years that has lapsed after his debarment in 2012 as the record shows that no misconduct took place under his operation as a representative in the financial services Industry.

 

HAS THE APPLICANT MADE OUT A CASE FOR RECONSIDERATION

 

24.                It is common cause that the Applicant having given YES answers to sections 2 and 5 of the forms FSP 4B and 4D that he conceded that his fit and proper requirements relating to honesty, integrity and good standing were questionable. Section 2 and 5 of forms FSP 4B and 4D unequivocally enjoined the Applicant to make a full explanation and provide all information in a separate annexure and attach same to the application form.

 

25.                The Applicant failed to take the FSCA into his confidence by complying with the request disclose all material information to be considered by the FSCA in considering the application submitted on behalf of Muzi Consulting Agency (Pty) Ltd for authorisation as an FSP.

 

26.                It was the FSCA that had to send various correspondence to Musa Properties and Sanlam Skye in order to collate relevant information to enable it to consider the application.

 

27.                In Kudo v The Cape Law Society[1] the court held that in considering whether the onus has been discharged the court must:

 

‘...have regard to the nature and degree of the conduct which occasioned applicant’s removal from the roll, to the explanation, if any, afforded by him for such conduct which might, inter alia, mitigate or even perhaps aggravate the heinousness of his offence, to his actions in regard to an enquiry into his conduct and proceedings consequent thereon to secure his removal, to the lapse of time between his removal and his application for reinstatement, to his activities subsequent to removal, to the expression of contrition by him and its genuineness, and to his efforts at repairing the harm which his conduct may have occasioned to others.’

 

28.                The Applicant after he had been debarred for an act of dishonesty, had an opportunity to redeem himself by disclosing all the material information that could assist the FSCA to consider the application brought by his company for a licence favourably.

 

29.                As fully set out above, the FSCA having been furnished with the relevant information by the forensic department of Sanlam Skye, established that the information provided by the Applicant in the application for the licence differed materially to that which the Applicant furnished during the disciplinary hearing by his former employer, Musa Properties. The is no explanation from the Applicant as to why he furnished misleading information to the FSCA.

 

30.                In his application for reconsideration, he seeks to blame the FSCA for not considering his submissions before the decision to decline his licence application was made and further wants to insinuate that the minutes of the disciplinary hearing have not been captured correctly. It is further disconcerting for the Applicant to cast aspersions against the FSCA relating to the alleged delay and alleged “laziness”. It is apparent that the applicant is not rehabilitated as he does not display any remorse at all. It is the failure by the Applicant to disclose material information when requested to do so that caused the delay.

 

31.                As correctly argued by the FSCA in its heads of argument, the Applicant who intends holding the position of a key individual in his company, should be assessed differently as he plays a critical oversight role. The Applicant has not made a full and frank disclosure in his application for a licence and has in fact though his conduct concealed material information to the FSCA. If the FSCA did not take steps to request for further information from third parties, the affidavit of Ms PMM and the minutes of the disciplinary hearing of the Applicant, the FSCA ran the risk of having considered and adjudicated on the application without such material information.

 

32.                Consequently, it is for the above reasons that we find that the Applicant has not made out a case for reconsideration of the decision of FSCA in terms of section 230 of the FSR Act. There is no basis in law for us to interfere with the decision of the FSCA dated 27 June 2024, as we are satisfied on the facts before us and the law that the Applicant does not meet the fit and proper requirements in respect of honesty and integrity.

 

ORDER

 

The application for reconsideration is dismissed.

 

Signed on behalf of the Tribunal on 11 November 2024 by Adv M Mphaga SC (Panel Member) with the panel consisting also of:

 

Judge LTC Harms

 

Chairperson: Financial Services Tribunal

 

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