Secondary

Ombud

Appeal Board upholds FSB debarment decision

A FSP was suspended on 27 March 2015 for failure to submit a compliance report and not successfully completing the RE1 for key individuals.

According to a recent Appeal Board decision, the FSP continued doing business after being notified of the suspension of its licence. This came to the attention of the FSB, who informed the FSP on 10 October 2016 that its authorisation had been withdrawn. The notice also advised the FSP that it was debarred for a period of five years.

“The primary reason for the withdrawal of the license was due to the appellant’s failure to comply with the Act, in that she failed to file a compliance report and has not sat and passed the RE.1 exam. The grounds for the debarment was that the appellant contravened the Act by conducting financial advisory and / or Intermediary services without being licensed thereto, thus no longer meeting the requirements contemplated in Section 8 of the FIAS Act relating to qualities of honesty and integrity.”

In her defence, the appellant noted that she did not intentionally continue conducting financial services after the suspension. She claimed that she was not aware of the suspension as her secretary failed to inform her about the suspension. She also indicated that due to a number of personal matters, she was “in an emotional turmoil in March and April 2015”.

In a letter dated 22 April 2015 to FSB, the appellant mentions that she became aware of the suspension around March 2015 yet, during the appeal hearing, she “…jettisoned the letter of the 22nd April 2015 and submitted that she did not know anything about the letter as she did not author the letter.”

“Mr Bredenkamp (for the FSB) argued that if the appeal panel accepts (appellant’s) version that her secretary failed to inform her of ITI Brokers suspension, her failure to lodge positive enquiries herself in response to a notice of intention to suspend ITI Brokers for more than a year amounts to willful abstention. Mr Bredenkamp’s argument in this regard cannot be faulted.”

In this regard the Appeal Board notes:

“Indisputably (the appellant) willfully abstained from lodging any enquiries with FSB as she knew what the answer to her enquiries would be. She knew that she will be informed that ITI Brokers was suspended. In Pickvest Investments (Pty) Ltd vs The Registrar of FSB, Judge Howie, the erstwhile chairperson of the board, found that if you fail to make diligent enquiries where common sense basically tells you something and you do not act in accordance with the cognitive appreciation of what common sense tells you, the only inference that can be drawn from that, is that you (are) doing so in a dishonest capacity. You are not asking the questions because you know the answer. And in the same parenthesis, (the appellant’s)  willful abstention amounts to dishonesty on her part as this conduct was found in Pickvest to be warranting a finding of dishonesty and lack of integrity.

Needless to say, the appeal was not upheld.

This decision also contains valuable insight into the duties and obligations of key individuals which we will discuss in another article soon.

Please click here to read the Appeal Board finding.

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