The FSCA’s Guidance Notice 1 of 2019 clarifies the requirements for debarment as described in Section 14(3) of the FAIS Act with which an FSP must comply when debarring a person. It is important that these requirements should be contained in an FSP’s policies and procedures governing its debarment process.
The Guidance Notice shares the following steps that aim to record these requirements in a practical manner:
Step 1: Give adequate notice in writing to the person
The notice should state the following:
- the FSP’s intention to debar the person;
- the grounds and reasons for the debarment.
- any terms attached to the debarment, including, in relation to unconcluded business, any measures stipulated for the protection of the interests of clients (section 14(3)(a)(i));
The FSP should, through the notice, provide the person with a copy of its written policies and procedures governing the debarment process.
The FSP should further, through the notice, give the person a reasonable opportunity to make a submission in response.
What constitutes “adequate notice” and “reasonable opportunity” will depend on the circumstances of each case. For example, when there are reasonable grounds to believe that substantial prejudice to clients or the general public may occur, this may warrant that debarment proceedings are carried out on an urgent basis.
It has been noted that representatives approach the FSCA, after the debarment, to request the documentation and reasons for the debarment by the FSP from the Authority. In this regard, the FSCA urges the FSP to also provide a representative with the documentation that informed the decision to debar the representative in order to enable the latter to formulate a proper response. As seen in a number of Tribunal findings, failure to do so could lead to the debarment being set aside.
Step 2: Consider (together with all available facts and information) any response received from the person that the FSP intends to debar, and (where applicable) have regard to information regarding the conduct of the person that is furnished by the FSCA, the Ombud or any other interested person.
Step 3: Take a decision whether or not to debar the person and immediately notify the person in writing of –
- your (the FSP’s) decision;
- the persons’ rights in terms of section 228 of the FSR Act, i.e. the right to –
- request reasons for the decision; and
- have the decision reconsidered by the Tribunal.