The Financial Services Tribunal (FST) has upheld the debarment of a former Standard Bank financial planner who borrowed money from his clients.
The Tribunal’s decision, issued last month, addresses the debarred representative’s inappropriate financial dealings with Standard Bank’s clients and his failure to declare his outside business activities.
The bank appointed Thapelo Jan Baloyi as an independent contractor for five years in October 2022. He provided financial planning services at the bank’s Secunda branch.
In July 2024, following complaints, Standard Bank launched an investigation, which found that Baloyi borrowed money from three clients (R1 000, R2 500, and R1 000, respectively). Another client complained that Baloyi borrowed R25 000 from her Stanlib investment, undertaking to repay the loan within six months with interest of R5 000. According to Standard Bank, none of the clients was repaid.
Another client reported he asked Baloyi to help his daughter obtain employment with the bank, for which Baloyi solicited R17 000. However, the client’s daughter did not secure a job, and the money was not refunded.
On 1 August 2024, Baloyi terminated his contract with Standard Bank. The following day, the bank terminated the contract with immediate effect, citing material breach. The grounds included the clients’ complaints and conducting outside business with the banks’ clients, on its premises, without having disclosed this to the bank, as required by the terms of the contract.
Standard Bank commenced debarment proceedings against Baloyi.
In his representations, Baloyi denied that this external business activities breached either the bank’s policies or the FAIS Act. He contended that his employment classification permitted him to engage in such external work.
Furthermore, Baloyi argued that the FAIS Act does not regard undeclared external work as a ground for debarment unless it results in demonstrable harm to clients or the bank. He asserted that no such harm occurred, saying his actions were not malicious and did not create a conflict with his professional obligations to Standard Bank.
Baloyi denied making an offer of employment in exchange for payment. He stated the discussions with the client and the client’s daughter were solely about a potential job opportunity at Standard Bank, which was contingent upon the daughter meeting the bank’s recruitment criteria.
Standard Bank debarred Baloyi in November last year.
His reconsideration application reiterated similar defences to those contained in his representations to Standard Bank. He also alleged irregularities in the debarment procedure, which the Tribunal rejected.
Clear conflict of interest
A pivotal element in the Tribunal’s ruling on the merits was Baloyi’s admission that he had been conducting a consulting business with Standard Bank clients without declaring it, as mandated by his employment contract. This admission directly undermined Baloyi’s defence that his employment classification permitted such activities without disclosure. The Tribunal rejected this argument, pointing to the explicit terms of the Independent Contractor Agreement, which required Baloyi to declare any direct or indirect business interests.
The Tribunal further highlighted that Baloyi’s failure to disclose his outside business constituted a clear conflict of interest. This breach was exacerbated by Baloyi’s acknowledgment in the contract that “a failure to disclose any existing conflict of interest may lead to the termination of the agreement”.
The FST said it was not disputed that Baloyi offered the client’s daughter an employment opportunity. Baloyi alleged the bank halted the recruitment process, whereas the bank alleged it was Baloyi who did not want to proceed.
Baloyi failed to provide Standard Bank with a record of the communication between himself, the client, and the daughter, despite his undertaking to do so. The FST said it could be reasonably inferred from Baloyi’s “bare denial” and the common cause facts that the client was induced to pay the R17 000 with the hope that his daughter would be employed by the bank.
Abuse of trust
The Tribunal characterised Baloyi’s financial interactions with the clients as a severe abuse of trust and a violation of his fiduciary duties.
A particularly troubling case involved “Ms TG”, from whom Baloyi requested a R1 000 loan via WhatsApp. When Ms TG threatened to report him to the police, Baloyi “deleted the WhatsApp messages requesting the money”, which the Tribunal interpreted as an attempt to conceal his actions.
Baloyi’s role as a financial planner granted him access to clients’ confidential financial information. The Tribunal found that he misused this position of trust by borrowing money from clients without repayment, rather than advising them to save and grow their wealth.
The FST stated: “This conduct cannot be condoned, and we find that the applicant was dishonest and abused his position of trust when he solicited money from the respondent’s clients in conflict with obligations to protect and advance such clients’ financial positions.”
To frame this breach, the Tribunal cited the Supreme Court of Appeal’s decision in Phillips v Fieldstone Africa (Pty) Ltd and Another, which articulates the principles governing fiduciary relationships. The judgment explains, “Where one man stands to another in a position of confidence involving a duty to protect the interests of that other, he is not allowed to make a secret profit at the other’s expense or place himself in a position where his interests conflict with his duty.”
Baloyi defended his actions by asserting that the payments he received were legitimate fees for financial advisory services provided under his business model. The Tribunal dismissed this claim, stating, “even if the applicant did receive money for financial services rendered, then such services were in breach of the respondent’s policies and the FAIS Act”.
Furthermore, the Tribunal pointed to Baloyi’s lack of remorse, noting that “instead of showing remorse for his conduct, he proceeded to allege that these clients were making advance payments for the financial advisory services he was rendering to them”. It deemed this defence unconvincing, particularly in light of the clients’ complaints and the absence of corroborating evidence.
The Tribunal determined that Baloyi’s conduct had irreparably compromised the qualities of honesty and integrity required under section 13(2)(a) of the FAIS Act. It concluded that he no longer met the character requirements for financial service providers. Consequently, the Tribunal found no basis to interfere with Standard Bank’s decision to debar Baloyi.
