The Financial Services Tribunal has held that shortcomings in a representative’s sales process do not, without more, demonstrate the lack of honesty and integrity required to justify a debarment under the Financial Advisory and Intermediary Services Act.
In setting aside Clientèle Life’s debarment, the Tribunal held that where the facts relied on by the insurer were equally consistent with poor communication, inadequate explanation, or non-compliance with the prescribed sales process, the inference of deliberate dishonesty could not properly be drawn.
The case arose from a telephonic sales call conducted by Thandeka Aphane on 20 March 2026 involving a Clientèle Funeral Dignity Plan.
Clientèle argued that Aphane had failed to follow its prescribed sales process in several important respects. It alleged that she created the impression she was calling about the prospective client’s online credit application rather than to market a funeral policy, did not adequately disclose the true purpose of the call, departed from the approved sales script, failed properly to explain the product and the monthly premium, and obtained the client’s consent to a debit order without ensuring that he understood the nature of the transaction.
According to Clientèle’s summary of the call, Aphane referred to the client’s credit application, stated that Clientèle was not affiliated with any credit company, and said she was calling to assist him with a “cash payout” payable within 24 hours of a successful death claim under the Ultimate Funeral Dignity Plan. She then asked whether he preferred a minimum cash payout of R30 000 or a maximum cash payout of R50 000. When the client selected the R50 000 option, she advised him that the monthly premium would be R390.
The insurer argued that the repeated emphasis on a “cash payout”, particularly in the context of the client’s credit application and before the nature of the funeral policy had been fully explained, contributed to the impression that Aphane had misled the client.
It also criticised her explanation that the DebiCheck mandate would “unlock everything”, after which the client’s “things will be going well” and he would “be able to use everything”, arguing that she failed to explain that the mandate authorised the monthly deduction of policy premiums.
Taken together, Clientèle submitted that these shortcomings demonstrated dishonesty and showed that she no longer met the statutory honesty and integrity requirements.
Aphane’s response
Aphane disputed that conclusion. She argued that Clientèle had considered the sales call in isolation and ignored the context in which it took place.
According to her, the call formed part of Clientèle’s approved Phone Finder/Credit and Loan campaign, which required representatives to tell prospective clients they had recently applied for credit online and had requested Clientèle to contact them. Her references to the client’s credit application were therefore consistent with the approved campaign and were never intended to suggest that she was processing or approving a loan.
She also challenged Clientèle’s reliance on her use of the expression “cash payout”, pointing out that the same terminology appeared in the insurer’s approved sales script.
More fundamentally, she argued that Clientèle had conflated alleged shortcomings in her compliance with internal sales procedures with evidence that she lacked honesty and integrity for purposes of the FAIS Act.
Tribunal: Compliance shortcomings did not prove dishonesty
The Tribunal noted that section 14 of the FAIS Act requires an authorised financial services provider to debar a representative if it is satisfied, based on the available facts and information, that the representative no longer complies with the fit and proper requirements or has materially contravened the Act.
The Tribunal said the issue before it was not whether Aphane had complied perfectly with Clientèle’s sales process, but whether the insurer had established that she acted dishonestly and that her conduct was sufficiently serious to impugn her honesty and integrity.
Referring to earlier Tribunal authority, it emphasised that the honesty and integrity requirement concerns a representative’s personal character, and not every breach of an employer’s internal procedures, act of negligence, or instance of poor performance justifies a conclusion that those requirements are no longer met.
The Tribunal said the insurer was entitled to criticise the way Aphane presented the product and acknowledged that the call contained repeated references to a “cash payout” before the nature of the policy had been fully explained. It also accepted that her explanation of the product may have lacked the clarity required by Clientèle’s prescribed sales process, and there may have been deficiencies in her explanation of the DebiCheck mandate.
However, the Tribunal found that Clientèle’s case rested substantially on inference rather than direct evidence. It held that an inference of dishonesty could not be drawn merely because shortcomings had been identified in the way the sales call was conducted. If the objective facts were equally consistent with poor communication, inadequate explanation, or non-compliance with the prescribed sales process, the inference of deliberate dishonesty could not properly be drawn.
The Tribunal further observed that Clientèle’s complaint was not that the required disclosures had been omitted altogether, but that they were communicated in a manner that was rushed or unclear and were insufficient to ensure that the client understood the nature of the product and the transaction.
The audio recording itself had not been placed before the Tribunal. It therefore could not independently assess those evaluative findings.
The documentary record showed that Aphane referred to the Clientèle Funeral Dignity Plan several times during the call, informed the client that Clientèle was not affiliated with any credit company, explained that the cash benefit related to a successful death claim, later told the client that she was not assisting him with a loan but with the Clientèle Funeral Dignity Plan, and read the prescribed terms and conditions, repeating them when the client requested this.
The Tribunal also noted that Clientèle’s approved sales script repeatedly referred to “cash”, “cash pay-out”, and “cash benefit” when describing the Funeral Dignity Plan. Although it accepted that the insurer was entitled to criticise the way Aphane presented the product, it found that those criticisms did not objectively establish that she had deliberately misrepresented the nature of the policy.
Ultimately, the Tribunal concluded that, even accepting Clientèle’s criticisms at their highest, the evidence established no more than shortcomings in the way Aphane communicated with the client and complied with the insurer’s prescribed sales process. Those shortcomings did not demonstrate conduct sufficiently serious to impugn her honesty and integrity. As a result, the jurisdictional requirements for debarment under section 14 of the FAIS Act had not been established, and the debarment was set aside.
Significance
The decision reinforces that shortcomings in complying with an FSP’s internal sales processes do not, without more, establish the lack of honesty and integrity required for debarment under section 14 of the FAIS Act.
FSPs remain entitled to enforce compliance with their internal sales processes and to discipline representatives who fall short of those standards. However, where debarment is based on an alleged lack of honesty and integrity, the available evidence must establish more than poor communication or non-compliance with internal procedures; it must objectively demonstrate conduct sufficiently serious to show that the representative no longer meets the statutory fit and proper requirements under the FAIS Act.
