The Financial Services Tribunal (FST) has overturned the debarment of a financial adviser after finding that an allegation of dishonesty could not be separated from the underlying contractual dispute on which it depended.
Jennifer Gayle Richardson was debarred by Scottfin Insurance Brokers (Pty) Ltd after denying during her recruitment that she was subject to a restraint of trade with her former employer.
Scottfin based the debarment not on whether the restraint existed or was enforceable, but on Richardson’s alleged misrepresentation and subsequent failure to correct it. This distinction became central to the Tribunal’s decision.
Richardson had previously worked for Scottfin before joining Econorisk Broker Consultants (Pty) Ltd. In early 2025, while still employed by Econorisk, she approached Scottfin about returning to the business.
At a recruitment meeting on 5 February 2025, Richardson was asked whether she was subject to a restraint of trade and said she was not. According to affidavits later provided by two Scottfin employees who attended the meeting, she also said she was confident she could move the client portfolio she had developed at Econorisk to Scottfin.
Scottfin created a new position of sales manager and appointed Richardson as a financial services representative from 1 March 2025.
Scottfin ultimately debarred her on three related grounds. It found that she had intentionally or recklessly misrepresented that she was not subject to a restraint, had subsequently failed to disclose or correct her earlier statement, and the misrepresentation was material because it induced Scottfin to appoint her to a position structured around the Econorisk client base.
Richardson challenged the debarment, arguing, among other things, that she had genuinely believed she was not bound by a restraint and that a dispute about contractual documentation did not establish dishonesty.
The Tribunal said the onus rested on Scottfin to justify the debarment on a balance of probabilities. Where dishonesty is alleged, there must be proof of a dishonest state of mind – an intention to deceive. A representation made in the genuine, although mistaken, belief that it is true is not dishonest.
It also reiterated that debarment is a protective measure intended to protect the public and the integrity of the financial sector, rather than a remedy for contractual or employment disputes. The Tribunal has previously held that the debarment power cannot be used to enforce a restraint of trade or resolve disputes arising from one.
The fundamental difficulty
After articulating the legal principles, the Tribunal identified what it described as a “fundamental internal difficulty” in Scottfin’s case.
Scottfin had expressly stated that its decision was “not premised upon the existence of the restraint-of-trade agreement, nor upon any assessment of its enforceability”. It took no position on whether the restraint would have been binding or enforceable.
But the Tribunal found that every aspect of the alleged misconduct depended on that very restraint.
The alleged misrepresentation was Richardson’s denial that she was bound by it; the alleged non-disclosure was her failure to disclose its existence; and the alleged materiality arose from the risk the restraint was said to pose to Scottfin’s business.
“If there was no enforceable restraint, the Applicant was entitled to compete for and to service Econorisk clients, and her denial, even if inaccurate, misrepresented nothing of legal substance,” the Tribunal said.
“The Respondent cannot at once decline to establish that the Applicant was bound and yet debar her for dishonestly denying that she was bound.”
There was a further difficulty. The Tribunal said a statement that a person is “not subject to a restraint of trade” is not simply a statement of fact but an assertion about that person’s legal position.
Where the existence or binding nature of the contractual obligation is genuinely disputed, the statement may reflect an honestly held understanding even if that understanding later proves to be wrong.
Scottfin therefore had to establish that Richardson knew she was legally bound by the restraint and nevertheless deliberately represented that she was not.
The Tribunal found that it had not done so.
What Richardson knew when she denied the restraint
The chronology became important in assessing Richardson’s state of mind.
When she denied being subject to a restraint on 5 February 2025, she was not in possession of an executed agreement.
On 19 and again on 24 March – about six weeks after the recruitment meeting and after she had joined Scottfin – Richardson asked Econorisk to send her a copy of her employment contract.
On 25 March, Econorisk sent her a document recording a commencement date of 1 May 2023 and containing a two-year post-termination restraint. Econorisk’s attorneys subsequently wrote to her on 9 April stating that she remained bound by it.
The Tribunal noted that the version of the agreement later produced bore no signature on behalf of Econorisk: the employer’s signature block was blank, undated, and unwitnessed.
The agreement did, however, contain an electronic signature attributed to Richardson.
Econorisk’s Mr Blake described the document as one “digitally signed by yourself and sent to HR”, adding that electronic signatures were regarded as original signatures.
Richardson disputed that she had executed the restraint and, after receiving the document, requested “one with my actual signature on it”.
The Tribunal emphasised it was not deciding whether her challenge to the signature was correct. Her request was significant because it was consistent with her contemporaneous position that she did not accept the document as one she had executed.
There was also no affidavit from anyone at Econorisk who had participated in, witnessed, or administered the electronic signing process. The affidavits relied on by Scottfin were from its own employees, who could not have had direct knowledge of how the Econorisk document was executed.
The Tribunal said it was unnecessary to determine whether the electronic signature was authentic or whether the restraint would ultimately have been enforceable.
The question was whether Scottfin had established, on a balance of probabilities, that Richardson intentionally deceived it when she denied being bound.
The unresolved dispute over the agreement, the chronology of the documents, and the absence of direct evidence about the electronic signature meant the objective facts were at least equally consistent with Richardson having honestly believed she was not bound.
Scottfin had therefore failed to establish the dishonest state of mind required for debarment.
Scottfin’s conduct and the question of materiality
Scottfin’s case also depended on the alleged misrepresentation being material.
It argued that Richardson’s denial induced it to appoint a representative who, unbeknown to it, was subject to a restraint, thereby exposing the business to legal and commercial risk.
The Tribunal tested that argument against what happened after Richardson joined Scottfin.
Richardson said she was initially told she was not expected to approach or solicit Econorisk clients because doing so was inconsistent with Scottfin’s business practices.
She said that about two-and-a-half months later the position changed, and she was placed under pressure to approach clients associated with Econorisk.
There was documentary support for the change in approach.
In an email dated 5 August 2025, Scottfin’s Marius Marais instructed Richardson: “As per the lead list for clients you dealt with at Econorisk, please start setting up appointments with the clients. As advised, I will go with you to meet the clients.”
Scottfin explained that Marais gave those instructions because it believed no restraint existed.
The Tribunal found that this explanation itself illustrated the difficulty with Scottfin’s case.
If the lawfulness of soliciting Econorisk clients depended on the absence of a restraint, Scottfin’s own conduct proceeded on an assumption about the very contractual issue it had declined to establish.
Richardson, for her part, maintained that she had informed Marais of the correspondence she received from Econorisk and was nevertheless instructed to approach its clients.
The Tribunal did not make a finding accepting that version. Instead, it considered the implications of both versions.
If Richardson’s version was accepted, Scottfin’s assertion that it would never knowingly have exposed itself to the risk associated with the restraint was materially undermined.
On either version, the Tribunal found, the evidential basis for Scottfin’s materiality case was weakened.
It said Scottfin’s conduct was “more consistent with a commercial decision to pursue a competitor’s client base than with the conduct of a financial services provider that regarded the Applicant as lacking the honesty and integrity required of a representative”.
What the affidavits did – and did not – prove
Scottfin’s finding of dishonesty relied principally on affidavits by Marais and another employee, Barry Miller, who had attended the recruitment meeting.
The Tribunal did not reject their evidence.
It found that the affidavits established, on a balance of probabilities, that Richardson had denied being subject to a restraint when the issue was raised at the February meeting.
But that was not the decisive question.
The affidavits, which were deposed to on 3 March 2026 – about 13 months after the recruitment meeting and more than a month after Richardson’s dismissal – did not establish her state of mind when she made the statement.
The Tribunal also noted that Marais was not an independent witness because Richardson alleged that she had informed him of the correspondence from Econorisk, and he nevertheless instructed her to pursue its client base. Whether or not that version was ultimately accepted, the Tribunal said it affected the weight to be attached to his evidence on the disputed question of dishonesty.
The alleged continuing non-disclosure
Scottfin’s second ground was that Richardson’s conduct did not end with what she said at the recruitment meeting.
It argued that, after receiving the employment contract on 25 March and the attorney’s letter on 9 April, she failed to disclose the restraint or correct her earlier statement.
The Tribunal found this allegation encountered the same underlying difficulty as the original alleged misrepresentation.
It assumed Richardson was under a duty to disclose a restraint that Scottfin itself declined to establish was binding.
Her failure to provide the documents to senior management was also consistent with her stated belief that no binding restraint existed, as well as with her claim that she had raised the issue with Marais, her immediate superior.
Importantly, Richardson had given this explanation during the debarment process itself, including her account of Scottfin’s changing instructions about approaching Econorisk clients. The Tribunal said it could therefore not be dismissed as a reconstruction developed only after she applied for reconsideration.
Where the objective facts reasonably supported both an innocent and a dishonest explanation, Scottfin, as the party bearing the onus, could not discharge it simply by asking the Tribunal to adopt the graver inference.
No client dimension
The Tribunal also considered Scottfin’s attempt to connect the alleged dishonesty to Richardson’s fitness to provide financial services.
No client had been involved in the conduct complained of. No customer was misled, no advice was tainted, no policyholder suffered a loss, and no complaint was made.
Scottfin’s submissions on customer outcomes rested on the proposition that a person willing to deceive her employer might also deceive clients.
The Tribunal described this as “an argument from propensity, not from evidence”.
A complaint bearing no relation to client interests could not provide the cogent proof of unfitness required for debarment, particularly where the underlying conduct itself had not been proved dishonest.
The Tribunal also emphasised the severity of debarment. It operates industry-wide, is recorded on a public register and can deprive a person of their livelihood in their chosen field.
Measured against the threshold required for debarment, the Tribunal found that conduct concerning a disputed contractual obligation to a third party, involving no client or financial loss and which had already resulted in dismissal, was not sufficiently serious to establish that Richardson lacked the honesty and integrity required of a representative.
From incapacity to debarment
Finally, the Tribunal considered the sequence in which the dispute between Richardson and Scottfin developed.
On 21 November 2025, Scottfin convened an incapacity hearing concerning Richardson’s failure to meet income targets. That process was not concluded, and no incapacity finding was made.
On 1 December, it convened a disciplinary hearing on misconduct charges that included the allegation that Richardson had failed to disclose the Econorisk restraint during recruitment.
Her employment was terminated on 26 January 2026.
A notice of intention to debar followed on 17 March, and Scottfin debarred her with effect from 2 April.
The Tribunal said this sequence lent weight to Richardson’s argument that the debarment arose from the breakdown of the employment relationship rather than from a contemporaneous regulatory concern.
It did not find that the timing itself disproved a genuine honesty concern. But it noted that the issue now said to be fundamental had not prevented Scottfin from employing Richardson, placing her in a client-facing role and directing her towards Econorisk clients during 2025.
In the circumstances, the chronology “fortifies the impression that the debarment served an end other than the protective purpose for which the power exists”, the Tribunal said.
Dishonesty not established
The Tribunal concluded that Scottfin had failed to establish, on a balance of probabilities, that Richardson intentionally misrepresented her legal position or deliberately concealed information with the intention of deceiving it.
It found that the dispute was, in substance, about the existence and effect of an alleged contractual restraint arising within an employment relationship. Consistent with its previous decisions, the debarment power could not be used to resolve a dispute of that nature.
The Tribunal found no procedural unfairness in the debarment process; Richardson succeeded because Scottfin had failed to establish the substantive grounds for debarment.
It emphasised that its decision did not affect the termination of Richardson’s employment, which was governed by employment and labour law and fell outside its jurisdiction.
The Tribunal set aside Scottfin’s 2 April 2026 debarment decision. Although the debarment was set aside, the formal order remitted the matter to Scottfin for reconsideration rather than substituting a decision of its own.
