The Financial Services Tribunal (FST) has upheld a debarment despite an affidavit in which the client retracted his earlier sworn statement that the financial adviser initiated two policies without his consent.
The reconsideration application was brought by Puleng Mavis Khoele, who was employed as an adviser by Liberty Group Limited.
According to the Tribunal’s decision, Khoele claimed she received a lead from another financial adviser regarding a client who was interested in certain financial products. This adviser provided her with the client’s contact details, after which Khoele contacted him and initiated two policies.
In June 2024, the client lodged a complaint with Liberty, alleging the policies had been fraudulently opened in his name without his consent. The client requested the cancellation of both policies. Further supporting the complaint, on 1 August 2024, the client submitted refund application forms to Liberty, accompanied by an affidavit stating that he had never consented to the policies initiated in his name.
Liberty launched an investigation into the fraud allegations and attempted to contact Khoele for her input. However, Liberty stated that Khoele absconded from work, leading to the termination of her financial adviser code in August 2024.
Liberty’s investigation report noted that two different cellphone numbers were used for each of the policies, neither of which belonged to the client according to a TransUnion report. Both policies were electronically signed by the client through a one-time PIN (OTP) request sent to these cellphone numbers. During an interview with the investigator, the client confirmed that neither cellphone number was his, and his most recent policy with Liberty dated back to 2022.
Khoele received commission of more than R20 000, which was reversed following her debarment.
Grounds for reconsideration
In her reconsideration application, Khoele said the debarment was unfair because Liberty did not conduct a debarment hearing. She also claimed she never received a notice of intention to debar.
Khoele said the policies were initiated with the client’s consent at his workplace in Bloemfontein. She claimed the client provided her with his payslip for the debit order, and said the client had five different policies with Liberty, each using a different phone number, with three not initiated by her.
Additionally, she asserted that she had resigned rather than absconded, becoming aware of the fraud allegations only on 28 November 2024, and that criminal charges laid against her by Liberty were not prosecuted and were withdrawn.
Significantly, Khoele said Liberty failed to consider a second affidavit from the client wherein he retracted his complaint and the allegations of fraud.
In this affidavit, dated 30 November 2024, the client claimed he was “under the influence of substances” when he cancelled the policies and alleged fraud. He stated that he was desperate for money “only to realise” that he had been present when Khoele initiated the policies.
He attributed the phone number changes to substance abuse and lost phones but still wished to cancel the policies because of his financial situation.
Oral hearing is not mandatory
The Tribunal said the notice of intention to debar was sent via email on 29 November 2024, setting out the grounds, with the debarment policy attached. Khoele was given a reasonable opportunity for written submissions.
Although Khoele denied receiving the notice, she provided submissions on 3 December 2024, and during the Tribunal hearing, she conceded to responding to the grounds of debarment. Thus, the Tribunal found she was duly notified, dismissing her claim to the contrary.
Regarding the absence of a debarment hearing, the Tribunal clarified that although some financial services providers conduct oral hearings, the FAIS Act does not require one. It only mandates a reasonable opportunity for submissions and their consideration prior to debarment. Khoele was afforded this opportunity and made her submissions.
Second affidavit is not credible
On the merits, the Tribunal said the investigator’s report included an audit trail showing that the first policy was signed in Johannesburg on 22 September 2023 and the second in Bloemfontein on 13 December 2023. The investigator did not address the discrepancy in the locations, likely because Khoele could not be traced.
The Tribunal found Khoele’s claim of concluding both policies in Bloemfontein to be improbable given the different provinces. There was no proof of her attending the client’s workplace, no evidence that she met the client, and no telephonic or email correspondence supporting the claim that the client gave his consent. This was exacerbated by the non-client phone numbers used for the OTPs.
Khoele also failed to disclose details of the referring adviser, and she did not provide the payslip purportedly given to her by the client.
The FST said Liberty did consider the client’s second affidavit in which he apparently withdrew the allegations of fraud, claiming that he consented to the policies.
The evidence showed it was improbable that the client consented to the policies. The Tribunal said it seemed “rather convenient” that the client, who a mere two months earlier had claiming under oath that he never consented to the policies, would subsequently state in another affidavit that he did. “The latter affidavit is most incredible,” the FST said.
It said the facts supported Liberty’s finding that Khoele lacked honesty and integrity.
