Debarment must be supported by clear evidence that a representative lacks dishonesty and integrity – breaches of an FSP’s policies alone are not sufficient. This was the finding of the Financial Services Tribunal (FST) when it set aside the debarment of a Discovery Connect Distribution Services (DCDS) representative who was working under supervision.
DCDS debarred Ntokozo Ngcobo in March 2023, and she lodged her reconsideration application in March this year. This was more than 20 months after the deadline stipulated in section 230(2) of the Financial Sector Regulation Act (FSRA).
Ngcobo told the FST that her application was late because:
- She was pregnant when she received the debarment notification in March 2023 and has since had a baby.
- Her mental health has suffered tremendously because of losing her job, and she is the sole breadwinner and carer for a disabled mother, an uncle, a grandmother who suffered a stroke, and two children.
- She was not in a position to bring an application or appreciate what the process required.
The FST granted condonation for the late filing of the application, exercising its discretion in terms of section 230(2)(b) of the FSRA and Rule 31 of the Tribunal’s Rules. The Tribunal decided that the interests of fairness and the prospects of application’s succeeding on the merits compensated for the long delay.
Discovery Connect’s case against Ngcobo centred on allegations that she did not adhere to the FSP’s script during certain phone conversations and capture clients’ responses. Specifically, DCDS alleged that she failed to:
- ask the client medical questions, which led to the client not being covered properly;
- capture medical conditions stated by the client to ensure that the client has the correct plan; and
- conduct a proper needs analysis and provide the client with the necessary factual information based on the disclosed condition.
In addition, DCDS said she loaded a policy without asking the client relevant questions that could have led to underwriting.
Ngcobo submitted that during her employment, and after 10 months of not taking any leave, she suffered mental fatigue. She asked her team leader for leave, but her request was denied. She also submitted that when she was diagnosed with depression and anxiety, she was booked off by her doctor for two weeks.
Regarding the allegations against her, Ngcobo said that out of 39 calls, DCDS claimed to have found discrepancies on 16 calls. Only four of those calls concerned relevant financial products. She submitted the time stamps of the calls showed that she followed Discovery Connect’s script, and the client’s answers to the questions were in accordance with the script.
She submitted that the client was asked the medical underwriting questions per the script, and where she needed guidance, she had sought guidance from her team leader.
Lack of evidence to support debarment
The Tribunal said DCDS contended that Ngcobo had not provided sufficient evidence and supporting documents to support an application for reconsideration. However, the FST faulted DCDS for not demonstrating that Ngcobo was dishonest and lacked integrity.
The Tribunal found the investigation report provided by Discovery Connect to be wanting. The FST described it as simply a table summarising the calls placed, including remarks that certain questions were not asked.
The Tribunal was not provided with the recordings of the calls in question or the corresponding scripts. This material was also not provided to the chairperson of the debarment inquiry.
The FST noted that Ngcobo was recognised as the third top performer in the sales department in her first quarter of joining DCDS. Further, she was working under supervision and sought guidance from her team leader on matters related to her role as a representative and in some of the matters that formed the basis of her debarment.
It said what constitutes honesty and integrity must be considered in the context of the facts and circumstances of each matter. The FSP’s allegations should be weighed against all the available evidence, including the explanation provided by the applicant.
According to DCDS, Ngcobo have omitted certain underwriting information. If these allegations were proved correct, they may well be a breach of Discovery Connect’s policies. But they did not constitute dishonesty and a lack of integrity in terms of the FAIS Act, the Tribunal said.
The FST was not satisfied that Ngcobo’s debarment was justified based on the facts contained in the record.
The Tribunal decided it was in the best interests of both parties that the debarment be set aside instead of remitting the matter to DCDS.
