Cheating, fraud and many other forms of unethical behaviour are amongst the biggest personal and societal challenges of our time. In South Africa, we are confronted daily by media reports concerned with allegations of corruption and fraud.
While the media highlights the more extreme examples, less, or in most cases, no exposure is given to the occurrence of “everyday” unethical behaviour, for example, cheating when given an opportunity to do so. But is this “everyday” unethical behaviour acceptable in the financial services sector?
In our industry the characteristics of honesty and integrity are non-negotiable. The Fit and Proper requirements clarify these in detail. If an adviser fails to meet them, he or she will be debarred. A vast number of debarment decisions referred to the Financial Services Tribunal confirm the importance of this characteristic.
A recent Tribunal case indicates that there could be circumstances where an exception should be made.
The case at hand
A financial services representative applied for the reconsideration of his debarment on the grounds that he had forged a document.
The applicant attended a medical consultation and paid R150.00 for which he received a stamped receipt. To be able to claim this expense from his employer, he was required to provide proof in the form of a receipt. After this, he attended two further consultations for which he paid R300 each, but he had no receipt for these amounts. To overcome the problem, he changed the R150.00 on the first receipt to R750.00.
The question then is whether this act of dishonesty establishes that the applicant does not have the necessary qualities of honesty and integrity to act as financial services representative.
The employer thought it was and debarred him.
The representative referred the matter to the Tribunal for reconsideration.
“This is a borderline case and although there is much to be said for the view of the respondent that the applicant failed the test, I believe that the applicant should receive the benefit of the doubt and that, accordingly, the debarment must be set aside and it is so ordered,” the Tribunal notes.
Although the forgery was “amateurish and foolish” and did not cause loss to anyone, the Tribunal was of the opinion that it was not of such a serious nature that it warranted a dismissal or debarment.
In an article by Alan Holton on the same subject, he quotes the Tribunal as follows:
“The standard for the elucidation on this aspect is the Appeal Board decision of 1 September 2003 in the matter of Hamilton Smith & Company v The Registrar of Financial Market’s matter. In the said decision the Appeal Board expressed itself as follows:
“To determine whether a person is of good character and integrity involves a moral judgment. In arriving at that judgment, it is necessary to have regard to the manner in which the person concerned conducted himself not only in his private life but also in his dealings with those whom he has come into contact with professionally or in the course of his business …”
The authorities are therefore clear that one must assess these qualities in accordance with one’s whole person and it should not be limited to the person’s professional environment or to a single incident.”
Recent Tribunal cases discussed in this forum concerned blatant dishonesty for which there was no excuse. The difficulty arises when you have to discern between various shades of grey.
It would be well worth your while to read the two articles by Alan Holton referred to above for clarity on a subjective matter:
|●||Fairness in Debarment Procedures|
|●||Debarment – what does the characteristic of honesty and integrity imply?|
Click here to download the Tribunal notes.