A recent Labour Court ruling has reinforced that non-compliance with the Financial Advisory and Intermediary Services Act is not only a workplace concern but a serious regulatory offence that can justify dismissal.
In Standard Bank Insurance Brokers v Dlamini and Others, handed down earlier this year, the Labour Court upheld the dismissal of wealth manager Bajabulile Dlamini, finding that her failure to meet FAIS obligations constituted a significant breach of duty.
Dlamini, who serviced high-profile wealth clients, argued that her conduct amounted only to negligence. However, the Court disagreed, concluding that Standard Bank Insurance Brokers had reasonable grounds for dismissal, and the employee’s explanation for her misconduct was unacceptable.
The Court found that the Commission for Conciliation, Mediation and Arbitration (CCMA) arbitrator erred by substituting his own sense of fairness for what was reasonable from the employer’s perspective.
FAIS compliance breach
Dlamini joined Standard Bank in 2004 and, over the years, held several positions before being appointed as a wealth insurance manager in 2018. Reporting to the senior manager for Insurance Wealth Insure, her responsibilities included onboarding clients, growing her book, and servicing existing clients.
One of her key duties was managing policy renewals, which had to be discussed with clients directly – a process intended to prevent automatic renewals that could breach the General Code of Conduct and the Policyholder Protection Rules issued under the Short-term Insurance Act.
Standard Bank’s Power BI system assists wealth managers with compliance by triggering alerts two months before a policy renewal is due, prompting them to initiate the renewal process with clients. Despite this, an internal review in early 2023 found that Dlamini had failed to act on several renewal alerts. Of eight policies flagged for renewal, she had processed only five.
When asked to explain the discrepancies, Dlamini admitted that she was “usually more casual” about renewals and believed the system would automatically renew policies even without client interaction – an approach directly contrary to FAIS and company policy.
The bank suspended Dlamini in May 2023 pending an investigation, which uncovered further breaches of the Code of Conduct, including poor record-keeping and providing clients with incorrect advice.
A disciplinary hearing held in June 2023 found her guilty of negligence. Although a prior final written warning for a similar FAIS-related offence had expired, the chairperson found dismissal appropriate, citing the serious nature of the breach and the regulatory risks involved.
Dlamini challenged her dismissal at the CCMA. In December 2023, the arbitrator ruled in her favour, ordering retrospective reinstatement with back pay of R176 044.05. Standard Bank Insurance Brokers took the matter on review to the Labour Court.
Labour Court sets aside CCMA award
In an article published on Norton Rose Fulbright’s website, the firm’s Donald Dinnie and Jason Hudson noted that it was undisputed that Dlamini had committed the misconduct alleged. However, the CCMA arbitrator had concluded that her negligence, as opposed to gross negligence, was not serious enough to justify dismissal.
The Labour Court disagreed, finding that the arbitrator had made significant errors of law. Dinnie and Hudson explained that the Court emphasised the regulatory weight of FAIS compliance, stating that “failing to comply with FAIS requirements has serious consequences for the applicant”.
“The FAIS regulator can impose penalties ranging from fines to suspending or cancelling the applicant’s operating licence. Compliance is therefore a critical regulatory issue, not just an internal company rule.”
The Court also found that focusing on the distinction between “negligence” and “gross negligence” was overly formalistic. Based on the undisputed facts, Dlamini’s actions were a significant breach of her responsibilities under the FAIS Act. Notably, she had ignored the mandatory one-on-one client renewal process, wrongly assuming the system would automatically process renewals – an approach that would have contravened the Code.
Acting Judge S Snyman elaborated on the fundamental errors made by the arbitrator in his original determination. The Court highlighted multiple failures, including a lack of regard for the seriousness of the misconduct, the critical importance of unconditional compliance with the Code, the breakdown of trust between employer and employee, and the material risk of prejudice to Standard Bank Insurance Brokers.
The arbitrator also failed to consider Dlamini’s lack of explanation for her actions, the relevance of her prior final written warning, and Standard Bank Insurance Brokers’ consistent approach in dismissing employees who similarly failed in the past.
In balancing these factors, the Labour Court found that Dlamini’s long service and personal circumstances were insufficient to contradict the fairness of her dismissal. The judge concluded that, given proper consideration of all relevant factors, the only reasonable outcome was that the dismissal was justified.
