The Financial Services Tribunal (FST) has set aside the debarment of a former sales agent after finding that the investigation relied on by the financial services provider did not produce evidence supporting allegations of fraud, dishonesty, or misrepresentation.
The applicant, Mathabathe Khomotso Phogole, worked as an independent sales agent for Vision Marketing, which operated under the FSP licence of Credico Advisory Services (Pty) Ltd.
The matter arose from two policy applications she processed for the same customer on 30 November 2024.
According to the respondent, the first application did not qualify based on the customer’s income. A second application was then submitted reflecting additional income that enabled the customer to qualify for the product.
Credico concluded that the income may have been inflated to secure approval and alleged that the conduct amounted to fraud, dishonesty, and misrepresentation.
Phogole’s employment was terminated on 3 December 2024, the same day that an internal investigation report was produced. The report recorded that she had acknowledged failing to verify the customer’s income before submitting the application.
Based on the investigation report, Credico issued a notice of intention to debar her on 22 January 2025 and proceeded with a debarment decision on 29 January.
Tribunal finds investigation inadequate
The Tribunal found that Credico relied entirely on the internal investigation report when deciding to debar Phogole.
However, several weaknesses emerged during the hearing.
The relevant customer was never interviewed during the investigation, and the respondent conceded it had not obtained evidence confirming that the income recorded in the second application was incorrect.
The Tribunal described the investigation as effectively a desktop exercise that did not establish the factual basis for the allegations.
It also identified inconsistencies in the report itself. Although the complaint was initially framed as collusion, the report simultaneously referred to fraud, dishonesty, misrepresentation, and other forms of misconduct without evidence supporting those findings.
The Tribunal described the debarment decision as “unfounded and irrational” and found that the investigation report on which it was based was “materially flawed”.
Negligence does not automatically justify debarment
The Tribunal accepted that Phogole failed to verify the customer’s income before submitting the application.
However, it found that this conduct, although careless, did not amount to dishonesty, fraud, or misrepresentation.
Under section 14 of the Financial Advisory and Intermediary Services Act, an authorised FSP must debar a representative if it is satisfied, based on available facts and information, that the person no longer meets the fit and proper requirements or has materially contravened the Act. The fit and proper requirements include standards relating to honesty and integrity.
In this case, the Tribunal found that the available evidence did not support a conclusion that Phogole lacked those character qualities.
Credico’s own policy considered
The Tribunal also examined Credico’s internal debarment policy.
The policy provides that debarment may be considered where a representative no longer meets the fit and proper requirements, materially contravenes the FAIS Act, or conspires with another person to contravene the Act.
However, the Tribunal noted that the conduct established by the facts amounted at most to negligence. Because the debarment was based on allegations of dishonesty and fraud rather than negligence, the findings in the investigation report did not support the grounds relied upon for the sanction.
Debarment set aside
Because the investigation report on which the debarment was based was materially flawed and unsupported by evidence, the Tribunal held that the decision to debar the applicant could not stand.
The Tribunal also found that remitting the matter would serve no purpose and therefore set aside the debarment.
