The Financial Services Tribunal (FST) has set aside the debarment of a short-term insurance representative after finding that the financial services provider from which she had resigned initiated the debarment on the Financial Sector Conduct Authority’s FAIS portal before receiving and considering her representations.
The Tribunal said Suremarx Brokers CC’s process was procedurally unfair because the applicant, Merika Elizabeth Erasmus, was presented with a “fait accompli”: although she was invited to make representations, the debarment had already been initiated.
The Tribunal also considered whether the evidence before it established that Erasmus no longer met the fit and proper requirements. It concluded that Suremarx had not proved, on the record before it, that she had acted dishonestly, recklessly, or in a manner showing that she no longer satisfied those requirements.
Erasmus was employed by Suremarx as a representative rendering financial services under supervision in its short-term insurance business. She resigned on 1 April 2026, giving notice that her last working day would be 30 April, and intended joining another FSP on 1 May.
On 9 April, Suremarx issued a notice of intention to debar her. The following day, the notice was emailed to Erasmus, and the debarment was initiated on the FSCA’s FAIS portal. Her written representations were received on 15 April.
Procedural fairness
The Tribunal found that Suremarx had not complied with the procedural requirements in section 14 of the FAIS Act.
It said the chronology was decisive. The notice of intention to debar was issued on 9 April 2026, emailed to Erasmus on 10 April. On the same day, the debarment was initiated on the FAIS portal, whereupon her debarment status was changed. Her written representations were received five days later, on 15 April; the “debarment outcome” was submitted to the FSCA on 20 April and recorded on 22 April.
“A representative who is invited to make representations within five business days, but who is placed on the debarment register on the second day of that period has not been afforded a reasonable opportunity to be heard,” Tribunal said.
Initiating the debarment on the FAIS portal before receiving Erasmus’s response meant the invitation had become “an empty formality”. Her “fate was sealed before she was heard”.
The Tribunal rejected Suremarx’s attempt to reconcile the sequence of events, saying the brokerage could not contend both that a valid debarment had already occurred on 10 April and that the process remained incomplete on 20 April, when the supporting documents were still being assembled for submission to the FSCA.
“Its own email to the FSCA of 20 April 2026 – recording that the documents were ‘not readable and openable’ and would be resubmitted the following day – confirms that the record was still being assembled after the debarment had been registered.”
The Tribunal identified further procedural shortcomings. Suremarx relied on supervision records, training registers, email trails, underwriting documentation, compliance reports, and system audit logs that were not disclosed to Erasmus, depriving her of a meaningful opportunity to answer the allegations.
It also failed to provide its written debarment policy and procedure, which section 14(3) requires an FSP to furnish before debarring a representative.
Furthermore, Suremarx did not disclose its correspondence with the FSCA concerning the status of the debarment, obliging Erasmus to ascertain the existence and effect of the debarment independently.
The substantive case
Although the procedural complaint was dispositive, the Tribunal said it was appropriate to consider whether Suremarx had, in any event, made out its substantive case. This was particularly so because the debarment was founded principally on allegations of dishonesty and because the answer affected whether the matter should be remitted.
The Tribunal said the question was not whether Erasmus had proved her innocence, but whether Suremarx had proved, on the documents it placed before the Tribunal, that she had acted dishonestly or was otherwise no longer fit and proper.
Suremarx relied on four broad grounds for the debarment: alleged operational ability failures amounting to reckless conduct; alleged risk to the FSP arising from incorrect underwriting information; an alleged “pattern of non-compliance” said to affect Erasmus’s honesty and integrity; and alleged internal policy breaches, including deletion of sent items, failure to follow FAIS processes, and breach of a restraint of trade.
On the first ground – operational ability failure or reckless conduct – Suremarx relied principally on three client matters. In one, the insurer voided cover after a vehicle placed on a personal lines policy was allegedly found to have been used commercially. But the Tribunal said the record did not establish that Erasmus knowingly placed a commercial risk on a personal policy. It said the insurer’s decision to void cover was not, without more, proof of misconduct by the broker.
In another matter, a claim revealed that the insured property was underinsured. The Tribunal found that the record established an underinsurance shortfall, but not that Erasmus had negligently fixed the sum insured. It noted that the sum insured had been carried over from the client’s previous policy and had passed through Suremarx’s own renewal processes without objection. Underinsurance, the Tribunal said, did not by itself prove reckless conduct by the representative.
In a third matter, and in other files introduced later in the record, the Tribunal found that Suremarx’s own documents showed that the files had been reassigned to, or managed by, other persons, moved to other insurers, or finalised only after Erasmus’s departure. The Tribunal said those matters could not be attributed to her.
The second ground – risk to the FSP through incorrect underwriting information – did not add anything material. The Tribunal said the only concrete instance of alleged incorrect underwriting information was the vehicle matter already considered, and Suremarx had not shown any culpable misdeclaration by Erasmus. Nor had it produced evidence of actual reputational or financial harm attributable to her.
The third ground was the allegation that Erasmus lacked honesty and integrity because of a “pattern of non-compliance”. The Tribunal was particularly critical of this charge. It said there was no forensic report, no finding of misrepresentation, no proof of concealment, and no identified instance of Erasmus deliberately withholding material information. “There is, quite simply, no evidence of dishonesty on the record,” it said.
The fourth ground – alleged internal policy breach – also did not assist Suremarx. The Tribunal said the allegation that Erasmus had deleted data was not supported by the report Suremarx claimed to rely on, which was not produced. The available hosting-provider confirmation instead recorded that a full restore had been performed and that the relevant mailboxes were found to be empty of maliciously deleted material.
The complaint that Erasmus had not followed FAIS processes was, the Tribunal found, vague and unsupported. And the alleged breach of a restraint of trade was not a competent ground for debarment.
Collateral purpose?
The Tribunal also considered the context in which the debarment was initiated. It noted that no debarment steps had been taken while Erasmus remained employed, that the process began only after she resigned to join a competitor – “one day after Suremarx had publicly thanked her and wished her well” – and that Suremarx relied in part on an alleged breach of a restraint of trade.
Taken together, the Tribunal said, those circumstances gave rise to a reasonable apprehension that the debarment had been pursued, at least in part, for a collateral purpose. It reiterated that debarment serves to protect the investing public and the integrity of the financial sector, not to enforce contractual or employment rights.
No remittal
The Tribunal declined to remit the matter for reconsideration.
It said remittal would simply afford the FSP a second opportunity to make a case it had already failed to prove on the record it had chosen to place before the Tribunal. Because the evidence before it did not establish that Erasmus no longer met the fit and proper requirements, there was no basis for giving Suremarx another opportunity to pursue the debarment.
The Tribunal accordingly upheld Erasmus’s application and set the debarment aside.
