Debarment is a serious step, and a financial services provider must be satisfied that the available facts and evidence demonstrate that a representative materially contravened the FAIS Act before debarring him or her.
This was highlighted by the Financial Services Tribunal (FST) when it upheld a reconsideration application by a former OUTsurance employee. It found there were material disputes of fact between the parties – disputes that the Tribunal could not resolve based on the insurer’s evidentiary record.
Bonginkosi Peter Nyembezi, the applicant, joined OUTsurance in 2008 and was employed as an insurance broker manager. He told the Tribunal he managed a team of about 17 brokers.
In April this year, after being suspended and the initiation of a disciplinary process, he resigned.
OUTsurance furnished Nyembezi with a “termination of employment agreement” and a copy of its debarment policy. The termination document alleged that he no longer complied with the FAIS Act’s fit and proper requirements of honesty, integrity, and good standing.
The document set out several allegations arising from an internal audit conducted in February 2025 and informed Nyembezi of OUTsurance’s intention to debar him. The audit was triggered when the insurer could not collect the premiums on a number of policies.
Nyembezi disputed the allegations, but OUTsurance proceeded to debar him.
OUTsurance’s allegations stemming from its audit were:
- Reinstating a cancelled policy without following the correct company procedure.
- Providing a fraudulent lead to a subordinate for a fictitious customer.
- Adding a risk policy without the customer’s consent.
- Contravening OUTsurance’s employee gift and conflict of interest policy. Specifically, that Nyembezi solicited money and the purchase of a gift from two of his subordinates. The gifts were allegedly a display of gratitude for leads provided by the applicant to his team members.
Nyembezi contested the four allegations in his response to OUTsurance and before the Tribunal as follows.
- He phoned the policyholder and obtained his verbal consent to reinstate and/or activate the policy.
- The client was not fictitious – there were text messages and recorded phone calls with the customer, whose documents were uploaded to OUTsurance’s filing system.
- He phoned the customer after the policy had lapsed. The customer agreed to a policy reinstatement provided some items were removed from the policy.
- He admitted receiving money from a subordinate but denied these were payments or gifts for leads. He had a personal friendship with the subordinate and that “they helped each other now and then”. His understanding of the company’s gift and conflict-of-interest policy was that it applied to gifts to or from external parties, not between colleagues.
Unresolved material disputes of fact
A central theme in the Tribunal’s decision was the presence of a numerous material disputes of fact between the parties regarding the allegations levelled against Nyembezi.
It said OUTsurance had not furnished the Tribunal with supporting evidence capable of resolving these disputes, such as a statement, affidavit, or even an email from a client or a subordinate to confirm the allegations against him.
The Tribunal highlighted that Nyembezi consistently stated that all telephone communications with clients were made on recorded OUTsurance phone lines, and these recordings were available to the insurer.
The panel questioned OUTsurance’s legal representative on whether the company had attempted to retrieve the relevant recordings. The decision noted: “no clear response was provided, or that such call recordings do not exist”.
The FST said: “There was no explanation on why such call recordings continuously referred to by the applicant have not been obtained by OUTsurance and why these did not form part of their investigation. These did not form part of the evidence or the record.”
The Tribunal said these recordings “would have settled the matter” regarding the disputed allegations of fictitious leads and reinstatements, and OUTsurance “ought to have satisfied itself of the contents of the call recordings (alternatively other available evidence)”.
No statements from relevant team members were placed before the Tribunal regarding the alleged payments or gifts. It noted that Nyembezi denied the allegations and provided countervailing facts.
It also recorded that OUTsurance alleged Nyembezi had “pressured” subordinates to contribute financially or buy a gift, whereas the applicant disputed this. The Tribunal emphasised there were material disputes on this issue as well.
The Tribunal underscored that a debarment must be both procedurally fair and substantively fair. It pointed to the statutory requirement that an FSP must be “satisfied on the basis of available facts and information” before debarring a representative.
It also quoted OUTsurance’s debarment policy, which states: “A debarment is a serious action to be taken by an FSP against a representative and requires proper consideration of the facts of each case on its respective merits in reaching a decision to debar or not.”
The FST found that “in the absence of evidence having been furnished as part of OUTsurance’s investigation and the record, it is unclear how OUTsurance reached the decision that it did”.
The Tribunal said it was not satisfied, with reference to the evidence placed before it, that OUTsurance could have been satisfied that the debarment was justified.
It set aside Nyembezi’s debarment remitted the matter to OUTsurance for reconsideration.
