Representatives working under supervision remain fully subject to the FAIS Act’s standards of honesty and integrity. Supervision may relax the technical competency requirements under FAIS, but it does not insulate representatives from debarment if their conduct undermines the trust and integrity expected of those rendering financial services.
The Financial Services Tribunal (FST) made this point when it dismissed a reconsideration application brought on the grounds, inter alia, that the applicant was not a representative.
The FST’s decision also addressed the applicant’s contention that the financial services provider should not have proceeded with the debarment while her unfair dismissal dispute was pending before the Commission for Conciliation, Mediation and Arbitration (CCMA).
Momentum Metropolitan Life dismissed the applicant, Pamella Ntonjeni, in September last year after finding that, in 2022, she submitted three life insurance policy applications containing false employment information and used phone numbers not linked to the policyholders to secure consent via USSD. It debarred her in March this year after concluding that the conduct evidenced a lack of honesty and integrity and that she therefore no longer met the Fit and Proper requirements to act as a representative.
Ntonjeni submitted that the debarment process did not apply to her because she was not a “representative” or a “financial adviser” in terms of the FAIS Act. She was an “adviser assistant”, performing intermediary and administrative tasks under supervision. Her duties did not involve exercising discretion or providing advice and therefore fell within the exclusions specified in section 1(3) the Act.
In assessing Ntonjeni’s jurisdictional challenge, the FST examined how the Act defines a “representative” and whether her responsibilities – as set out in the contract of employment and supervision agreements – meant she was a representative.
The Tribunal said the Act’s definition of a “representative” encompasses anyone who renders a financial service to a client on behalf of an FSP, whether in terms of a contract of employment or a mandate. The exclusion applies only where the service rendered is of a clerical, administrative, or subordinate nature and “does not require judgment” and “does not lead a client to any specific transaction in respect of a financial product” (FST’s emphasis).
The Tribunal referred to the Memorandum of Agreement (MOA) between Ntonjeni and Metropolitan. The contract formally designated her as “a financial adviser” – a representative role that squarely engaged the provisions of the FAIS Act.
The MOA confirmed that Ntonjeni’s role extended beyond mere administrative support. She was required to “provide financial services to existing and prospective clients”. The FAIS Act defines “financial service” to include the rendering of intermediary services that lead a client to a specific transaction involving a financial product. This is what Ntonjeni did when she facilitated the issuing of the life insurance policies, the Tribunal said.
The MOA also subjected Ntonjeni to financial sector legislation and its regulatory consequences. Clause 7.2 stipulated that her employment was conditional upon her “meeting all the applicable regulatory requirements… to render the financial services”. Clause 7.7, which reinforced Ntonjeni’s status as a supervised representative, stated: “The employee agrees, as required in terms of the FAIS Act, to undergo… a period of prescribed supervision until he satisfies the competency requirements… Failure to undergo the required supervision or failure to satisfy the competency requirements ultimately will result in the termination of the employee’s employment.”
Clause 7.9 contained the following warning: “If the employee, for whatever reason, is no longer deemed to meet the ‘Fit and Proper requirements’, he must and will be barred from rendering financial services. The company has no discretion in this regard and must comply with the requirements of the FAIS Act.”
The supervision agreements also confirmed Ntonjeni’s regulated status under the FAIS Act. Clause 1.2 stated that Ntonjeni, referred to as the “supervisee”, “has been appointed as a representative of Metropolitan”. Clause 1.1 affirmed that the agreement applied for the purpose of “rendering financial services under supervision”.
Clause 3.1.3 required Ntonjeni to disclose to clients that she was “rendering financial services in the specific financial product categories under supervision”. This contradicted her claim that her duties were purely clerical or technical.
Furthermore, clause 3.1.4 identified the objective of the agreement as Ntonjeni’s “attainment of the prescribed requirements within the time limits set in the FAIS legislation”. These requirements were the competency component of the Fit and Proper standards – requirements that apply only to individuals functioning as FAIS representatives.
The Tribunal said representatives acting under supervision are exempt from the competency criteria, such as qualifications and experience. However, there is no exemption from the core personal attributes of honesty, integrity, and good standing.
Ntonjeni’s status as a registered representative placed her within the scope of the FAIS Act and rendered her subject to its mandatory debarment provisions if she breached the core requirement of honesty and integrity. The debarment was instituted solely based on a breach of the integrity requirement, and her supervised status did not shield her from the consequences of proven dishonesty, the Tribunal said.
CCMA proceedings are immaterial to debarment
The Tribunal also rejected Ntonjeni’s lis pendens (“suit pending”) challenge, which argued that the debarment process should have been suspended pending the outcome of her unfair dismissal dispute before the CCMA.
The Tribunal delineated the distinction between the internal employment disciplinary process under the Labour Relations Act and the statutory debarment process under section 14(1) of the FAIS Act, noting that the former addresses dismissal for gross misconduct, whereas the latter determines compliance with the Fit and Proper requirements to protect the financial services sector.
Citing its decisions in Sithembele Nokwazi Gambu v Capitec Bank Limited (2024) and Thako v African Bank Limited (2020), the Tribunal affirmed that section 14(1) imposes a peremptory obligation on FSPs to debar representatives who no longer meet these requirements, independent of employment-related outcomes.
The Tribunal found that the debarment process’s regulatory function was distinct from the CCMA proceedings, rendering the principle of lis pendens inapplicable and Ntonjeni’s assertion of prematurity or abuse of power unfounded.
Other challenges dismissed
The Tribunal also addressed Ntonjeni’s other procedural and substantive challenges.
On procedural fairness regarding disclosure, it found that the debarment process complied with the Promotion of Administrative Justice Act and section 14(3) of the FAIS Act, because Ntonjeni received adequate notice and was provided with a reasonable opportunity to respond, despite her failure to attend the rescheduled hearing or engage with the merits.
Substantively, the Tribunal upheld the debarment based on uncontroverted evidence of a pattern of manipulation in the three policy charges, rejecting Ntonjeni’s explanations as unpersuasive and confirming her breach of the Act’s integrity standards.
