Secondary

Crime and Punishment

It is not only in rugby that we see different standards being applied by those tasked with applying the rules.

The recent banning of an adviser in Australia, compared to some recent appeals against debarments in South Africa, illustrates the point.

Riskadviser, an Australian newsletter, reports:

Former ACE Insurance (ACE) risk adviser, Abhinav Gupta, was slapped with a permanent ban from working in the financial services industry, with the regulator saying he was not of good fame and character.

ASIC’s investigation of Mr Gupta’s conduct found he:

  • issued a policy in the name of a client who never agreed to taking out the policy, nor signed the application;
  • used a client’s bank account details on another client’s policy application without authorisation; and
  • issued at least 12 fictional policies in the names of clients that either did not exist and/or contained numerous fictional details in the policy applications, such as false employment details and non-existent bank accounts.

Mr Gupta was not remunerated by way of salary whilst at Combined Insurance, but received upfront and volume bonus commissions based upon policies sold, along with incentive prizes such as electronic devices and gift vouchers.

Some recent local cases were similar in nature.

  1. In the first decision, the appellant felt that a 5-year debarment was too harsh for having claimed commission from both the client and the product provider, in addition to telling the client that the commission would be less if she paid him directly, and that the product provider would not deduct commission as well. It was also held that he approached the client on two occasions to solicit loans. In its decision, the Appeal Board states: “…at no stage was the appellant ever prepared to accept that he had done anything untoward, let alone admitting that he fell short of the standard required of him by the FAIS Act, until the very last end when he had nowhere else to turn.”
  2. The second case concerns an adviser who submitted fictitious policies and was also debarred for five years. An investigator, employed by the product provider, found that the appellant employed unaccredited agents and paid them R500 for each proposal submitted. The sub-agents paid unemployed individuals R100 to obtain their personal details and sign blank proposal forms. “The appellant admitted to changing some of the employment details in order for the form to look more reasonable.”
  3. A third example also concerns the submission of fictitious policies. The appellant appealed against her two year debarment. During the appeal it came to light that she also worked through a sub agent, one Arthur, who disappeared after enquiries started. She would receive signed application forms, with personal and other required information provided on pieces of paper over a period of time.

The debarments by the FSB, on grounds of the advisers not being fit and proper in terms of honesty and integrity, were all upheld by the Appeal Board, and rightly so. The Regulator did not take these decisions lightly – a lot was done to ensure a fair outcome for all concerned.

One has to wonder on what grounds these appellants felt that the debarment period was excessive. Some would consider it lenient, considering the damage to the image of the industry. The lack of remorse borders on arrogance and provides little grounds for thinking that it will not happen again.

Perhaps we should, for once, follow the example set by the Australians, just like their judicial authorities do when a South African rugby player is sighted for foul play.

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