The Financial Services Tribunal (FST) has upheld the debarment of a former Sanlam Life representative who permitted his brother, whom Sanlam had also debarred, to advise his clients.
The applicant submitted that his brother provided only administrative or logistical support, and he allowed his brother to review client portfolios because he misunderstood the FAIS Act’s restrictions on debarred persons.
Sanlam Life employed the applicant, Stephen Jacobs, as a representative in May 2022. From March to July 2024, he operated under supervision relating to the services and product sub-categories for which he was not already authorised.
According to the Tribunal’s decision, in August last year, a manager flagged concerns about amendments to client portfolios under Jacobs’ care, prompting a request for a forensic investigation.
Sanlam’s forensic services unit reviewed the portfolios, analysed Jacobs’ emails from 2023 to 2025, application documentation, and correspondence related to six clients. Two clients were interviewed telephonically, and Jacobs was questioned in February this year.
According to the forensic report, Jacobs had enabled his brother, Jaykes, to render advice to his clients.
Jaykes had been employed by Sanlam from 2019 to 2023. Sanlam debarred him on the grounds of dishonesty and a lack of integrity.
According to the forensic investigator’s analysis of the six portfolios and the related correspondence, Jaykes made recommendations on existing or new products. In some cases, Jaykes drafted emails responding to Sanlam’s queries about client advice – emails that Jacobs then copied and sent as his own.
The forensic report stated that Jaykes invoiced Jacobs for his services – with the amounts often exceeding two-thirds of the commission. Additionally, Jaykes sent emails to clients, signing off as a “client care and product specialist”.
During the investigation interview, Jacobs described Jaykes as his mentor upon joining Sanlam, saying all Jaykes’ clients were transferred to him after his debarment. Client leads were pursued jointly: either brother would arrange Teams meetings, where Stephen gathered personal information and consent for records, while Jaykes presented quotations. Stephen emailed documents for signatures and admitted to sharing his log-in details with Jaykes if he were unavailable, claiming he tracked the activity.
Jacobs justified the high commission split by saying Jaykes had no other income and he wanted to help him. Jacobs maintained he had no intention of wrongdoing.
Sanlam debarred Jacobs in May this year. It said allowing a debarred person to render advice was a contravention of the FAIS Act and constituted non-compliance with its internal policy. In addition, Jacobs violated the group’s digital behaviour policy by sharing his log-in details with his brother.
Grounds advanced in the reconsideration application
In his reconsideration application, Jacobs argued the debarment was unfair because a formal hearing was not conducted.
He said debarment was too harsh. Sanlam should have issued a warning and given him an opportunity to remedy the situation. His conduct could not be characterised as dishonesty or a lack of integrity but was “a misjudgement made under supervision without malicious intent”.
In his augmented grounds, Jacobs acknowledged that his brother’s interactions with the clients might have constituted intermediary services under the FAIS Act – although that was not his understanding at the time.
Regarding the sharing of his log-in details, Jacobs claimed it was a “proxy code” that had been issued to Jaykes during his employment. It was used openly on shared devices monitored by Sanlam. Jaykes’ email signature identified him as a product specialist, not an adviser, and Jacobs was copied on all emails.
Jacobs also submitted that:
- Sanlam did not provide him with formal guidance on intermediary services or the restrictions on debarred individuals. Sanlam did not flag the arrangement, so he believed it was acceptable.
- He was not provided with a copy of the forensic report before his debarment.
- He was informed of his reconsideration rights only after his debarment was registered with the Financial Sector Conduct Authority.
- During the investigation, he conceded that he gave his brother access to Sanlam’s system because he did not expect it to lead to his debarment. He was not afforded an opportunity to explain the circumstances in which his brother accessed the system.
- No client harm, fund misappropriation, or fraudulent amendments occurred, yet he suffered loss of employment, income deprivation, and reputational damage.
Hearing is not requirement
In its decision delivered this month, the Tribunal dismissed Jacobs’ procedural challenges to the debarment.
Responding specifically to the argument that the lack of a hearing rendered the debarment unfair, the FST again pointed out that the FAIS Act does not mandate a formal or oral hearing prior to debarment. What is required is that a financial services provider affords a representative a reasonable opportunity to respond to the grounds for the debarment.
Regarding the non-disclosure of the forensic report, the Tribunal said the notice of intention to debar set out the grounds clearly. Jacobs failed to show prejudice from its absence even after receiving the report and augmenting his grounds for reconsideration.
Advice was rendered, not merely support
The Tribunal rejected Jacobs’ claim that his brother merely offered administrative support as “patently false”.
It said the client correspondence showed that Jaykes reviewed portfolios and made recommendations, and financial services were rendered when clients accepted those recommendations. Jacobs knew this because he was copied in on the emails.
The FST said Jacobs knew that Jaykes was holding himself out as an FSP because his email address was the one he used before his debarment. Jaykes also invoiced him as “Jaykes Jacobs Financial Services”.
If Jacobs had provided the advice as opposed to his brother, he would have been able to provide the information requested by Sanlam’s development manager and would not have required his brother to draft the emails explaining the advice given to clients, the Tribunal said.
Jacobs claimed he did not conceal his brother’s involvement. However, the Tribunal said he never disclosed to Sanlam that he had employed Jaykes.
Regarding the issue of system access, Tribunal said Jacobs knowingly granted a person who had been debarred for lacking honesty and integrity access to client data and allowed him to make recommendations to clients on financial products.
“It makes no difference that some of those clients were previously serviced by the applicant’s brother, and it is of limited to no probative value that the applicant’s brother’s email signature did not identify him as a financial services provider,” Advocate Porchia Long wrote on behalf of the Tribunal panel.
Regarding Jacobs’ contention that debarment was an unduly harsh penalty, the FST said the FAIS Act is clear: an FSP must debar a person who no longer meets the fit and proper requirements.
The application for reconsideration was dismissed.
