Secondary

debarment1

Reinstatement after Debarment

My husband was debarred almost 5 years ago, the reason for debarment was justified and fair. That said I do believe that he has paid enough for his mistakes.

Recently an FSP approached him for a position in the short term insurance industry. When he informed them that he was debarred, they said that they would look into it and try and assist.

The feedback that he received was that he had to wait for exactly 5 years to elapse and then he should try and have the debarment lifted himself.

Are there any companies or FSPs in this country that are willing to assist debarred brokers such as my husband? Surely there must be something like a “rehabilitation” program for these people? We all make mistakes and I would hate for this to hang over him for the rest of his life.

A guidance note, published in 2011, is still the only information available on the reinstatement of debarred representatives. The debarment process has, in many instances, been seriously abused and very little has come of this because aggrieved representatives had no recourse other than the high court, which virtually none could approach due to the high cost involved.

In 2013, the FSB published a new debarment form which set out exactly what a FSP was obliged to do when debarring a representative, but it appears that scant attention was paid to this, considering the number of enquiries we receive every time we publish something on the topic.

The guidance note on reinstatement is quite clear on who is responsible to ensure that representatives comply with the applicable requirements:

“It is the duty of the provider to ensure that their representatives are fit and proper. The Registrar does not assess the fitness and propriety of representatives. If the Registrar is of the view that a representative is not fit and proper, the Registrar must take an action against the provider for not complying with section 13 (2) of the Act.”

This was reiterated in a recent Appeal Board finding where the Board concurred with the decision of the FSB to hold the key individual responsible for the misdemeanors of a representative, and debarring him for five years.

Getting reinstated is a bit of a Catch 22 situation.

“The FSB does not approve the appointment of representatives – that is the function of the FSP. For this reason, the FSB cannot lift the debarment. A “good Samaritan”, in the form of a FSP, has to apply for removal from the list and reinstatement on the rep register. This can be either the original employer or another FSP in good standing.”

The reason for the debarment plays a role in the reinstatement process.

Where a rep was debarred after failing to pass the regulatory exam within the prescribed time, foe example, reinstatement can be requested with documentary proof after such a person actually passed the exam.

In instances where the debarment followed a serious transgression such as fraud, the FSB will determine the period of debarment, usually no longer than 5 years.

In such cases, getting the debarment lifted is a much more complicated process.

The FSB guidelines state that a “…representative will not be removed automatically from the list of debarred representatives as soon as a period of twelve months has elapsed.” The reappointing provider must address such a request to the FSB.

Before submitting such a request, the applicant must be satisfied that the representative is a person who is honest and has integrity. The provider must do so by submitting satisfactory evidence, affidavits or testimonials, in order to support the proposition.

The Guidelines provide more details, as well as an indication of what documentation is required, and how the FSB will handle the application.

We covered debarments in great detail over the years. If you do a search on our website, you will find an enormous amount of information on the subject.

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