A Financial Services Tribunal (FST) ruling dismissing an application for an exemption from the qualification requirements indicates how exemption applications are assessed and the limited circumstances in which the Financial Sector Conduct Authority’s refusal of such an application will be overturned on reconsideration.
In a decision delivered on 24 June, the Tribunal reaffirmed that personal explanations, unsupported by evidence and unaccompanied by showing that clients and the public interest will not be prejudiced, do not satisfy the statutory test for relief.
A request for an exemption
Mxolisi Praisworth Mbatha was first appointed as a representative in October 2004 in respect of Long-term Insurance subcategories A, B1 and B2, and in June 2005 in respect of Long-term Insurance subcategory C, Retail Pension Fund Benefits and Pension Fund Benefits.
Because he entered the industry before 31 December 2007, he benefited from the transitional arrangements then in force. Representatives appointed before that date were required to comply with the applicable qualification requirement by 31 December 2009 by completing 60 National Qualifications Framework (NQF) Level 5 credits. If Mbatha had done so, he would have been deemed to comply with the qualification requirement in section 23 of the Determination of Fit and Proper Requirements for Financial Services Providers.
The Tribunal found that he did not comply by the 2009 deadline or at any time thereafter. Instead, in October 2025, he applied to the FSCA for an exemption from the qualification requirement, coupled with a request that he be given 12 months in which to complete a recognised NQF Level 5 financial planning qualification.
In support of the application, Mbatha said he had suffered ill health following a Covid-19-related infection and had struggled with his health during the preceding three years. He said he had recovered and was able to resume his studies.
When the FSCA requested further information, including whether he had enrolled for a recognised qualification or completed any credits, he was unable to provide supporting evidence.
After the FSCA notified him of its intention to refuse the application and invited further representations, Mbatha acknowledged that he had been negligent, had not appreciated the importance of completing the qualification and had not treated it as a priority.
He also said he had completed 30 credits through Damelin but could not retrieve proof because the institution had closed and explained that he was supporting dependent children. He again asked for 12 months to complete the qualification.
The FSCA refused the application on 26 January 2026.
The reconsideration application
The Tribunal noted that Mbatha’s complaint was essentially that the refusal was unfair because this was his first exemption application and that, in his view, the law entitled him to apply for an exemption once the compliance period associated with his date of first appointment had expired.
He also reiterated that he did not understand why the application had been refused and again sought an opportunity to become compliant.
The Tribunal observed that he identified no error of law, fact or procedure on the part of the FSCA and did not suggest that the Authority had overlooked any relevant consideration or considered an irrelevant one.
The legal test
Turning to section 44 of the Financial Advisory and Intermediary Services Act, the Tribunal explained that the FSCA may grant an exemption only if the statutory requirements are met. The applicant bears the onus of establishing, on objective and reasonable grounds, that the exemption is justified and that granting it would not conflict with the public interest, prejudice clients or frustrate the objects of the Act.
The Tribunal added that “reasonable grounds” require objective facts rather than the applicant’s subjective assertions.
Applying the statutory test
The Tribunal accepted the FSCA’s reasoning on the statutory requirements and considered whether the decision was justified on the facts before it.
It agreed that Mbatha had failed to establish objective grounds for an exemption. His explanations amounted to “an absence of awareness of the requirement, a failure to treat compliance as a priority, and a request for indulgence”. The Tribunal concluded that such grounds do not constitute reasonable grounds within the meaning of section 44.
The Tribunal also agreed that Mbatha had been afforded ample opportunity to comply. He had entered the industry in 2004 and 2005, had the benefit of the transitional arrangements, and was required to comply by 31 December 2009. More than two decades had lapsed between his first appointment and his application for an exemption.
Although Mbatha said he had completed 30 credits through Damelin, there was no proof of this. The Tribunal added that, even if this assertion were accepted, 30 credits would still have fallen short of the 60 credits required under the transitional arrangements.
It also observed that health problems experienced during the preceding three years could not explain non-compliance dating back to 2009.
Hardship and the public interest
The Tribunal accepted the FSCA’s view that hardship, for purposes of section 44, “must be something more than the ordinary burden of compliance that is borne by every person subject to the requirement, failing which the exemption would be available to all who are required to comply”.
The Tribunal also explained why it considered Mbatha’s hardship argument insufficient.
It noted that the qualification requirement does not apply in every circumstance. A representative of a Category I financial services provider who is appointed only to render financial services in respect of Long-term Insurance Subcategory A or Friendly Society Benefits, or who is appointed only to perform the execution of sales subject to the requirements of the Fit and Proper Requirements, is not subject to the qualification requirement. Accordingly, Mbatha was not excluded from the industry altogether, and this “materially diminishes any claim of undue hardship”.
This was not the only reason the hardship argument failed. The Tribunal also found that the circumstances relied on by Mbatha did not differ materially from those faced by other representatives required to meet the qualification requirement and therefore did not constitute the type of hardship contemplated by section 44.
The Tribunal further agreed with the FSCA that the qualification requirement serves an important regulatory purpose. It exists to ensure competence, protect consumers, and support the professionalisation of the financial services industry. It said that “the absence of a minimum competency inherently creates risk to clients, whether or not harm has materialised”, and exempting a person who had remained unqualified for more than two decades “would erode that standard”.
For similar reasons, it concluded that granting the exemption would conflict with the public interest because it would sanction prolonged non-compliance, create inequality between the applicant and other regulated persons who had met the requirement, and frustrate the objectives of the FAIS Act.
Tribunal upholds the FSCA’s decision
The Tribunal concluded that Mbatha had failed to establish the statutory grounds required for an exemption and had identified no basis on which it could interfere with the FSCA’s decision.
Although the FSCA had argued that weight should be given to the views of a specialist regulator, the Tribunal said it was unnecessary to rely on that principle because the application failed on the facts and the statutory requirements themselves. The decision was sustained not by deference to the regulator but because Mbatha had failed to discharge the onus resting on him under section 44 of the FAIS Act.
The application for reconsideration was therefore dismissed.
