“The volumes of cases for debarments are mind boggling as they paint a picture of an industry replete with misfits and incompetent representatives. Simply put, the public is at risk.”
Harsh words from Matome Thulare, head of the Enforcement Department at the FSB, if read out of context. He was speaking during the latest telematics broadcast by the FSB on 3 September, and sketched a disturbing picture of what his department is experiencing in terms of debarments.
The industry, in general, appears to be confused about who is responsible for these actions. The first obligation is that of FSPs, as they are responsible for appointments and terminations of representatives.
It appears that, where FSPs have governance and risk management processes in place, they also conform to the rules on debarments. It is mainly in smaller practices, where the key individual has to wear many different hats, where problems occur.
There are mainly two problem areas: malicious debarments, or encouraged resignations.
The first often occurs where the process is used to settle contractual disputes or grievances, while the second stems from unwillingness or inability to conduct the required disciplinary steps, including a hearing. In my view, many of the latter occur where the key individual does not have the heart to kick someone out of the industry.
This is unfortunately not fair to the public. If someone is no longer competent or fit and proper, they should not practice in the industry until they have remedied such deficiencies.
In the presentation, the question is asked why use is not made of the 30 day resignation requirement required by law. This only applies where there is no other stipulation in the employment contract. In my days, we never dragged out the inevitable, and I suspect it is still prevalent.
In Personal Finance of 7 September 2013, mention is made of an advisor who acted in an untoward manner while in the employ of one of the leading banks. This was only discovered after he left their services, and his actions were reported to the FSB when uncovered. He is now working for another product house who, according to Personal Finance, has not yet been informed of the complaints against the advisor.
Spare a thought for the Regulator in cases like these. They cannot merely act on allegations – there are prescribed processes that need to be followed. Perhaps a review of these rules can ensure temporary removal of suspected individuals.
If you want to refresh your knowledge of the debarment process, please read Circular 4 of 2013 issued by the FSB.
The Debarment Notice required by the FSB also contains very clear guidelines on what you are required to submit when effecting a Section14 (1) debarment.