Reviews of decisions by the Registrar and the FAIS Ombud tend to take a slightly more formal and legalistic approach. In the case of the FSB, particularly, it also provides insight into cases that are not published, as is the case with those of the Ombud.
Jessie Tsusi and the Registrar
The appellant approached the Appeal Board after being debarred for two years by the Registrar for contravening the honesty and integrity requirements.
The appellant was employed as a representative by Old Mutual. Following complaints, the employer instituted a forensic audit. It found that Tsusi had misled clients into thinking that they were investing in Kruger Rands via Old Mutual. The clients were also convinced to deposit the money in the representative’s account, rather than that of her employer. The forensic audit was followed by a disciplinary hearing, which she did not attend, claiming that she was ill. She also did not respond to the Registrar’s notification of its intention to debar her.
She did however pay back the money to the two complainants from her own accounts.
At the appeal hearing, she also indicated that she “resigned as she knew it was inevitable that she would lose her job.”
The core issues for consideration by the Board were whether she had contravened the fit and proper requirements, and whether the debarment period was justified.
On the first, the Board ruled that the findings of the forensic audit were “overwhelming.”
Honesty and integrity
“The test to ascertain whether a financial service provider has met the fit and proper requirements is a moral judgment and goes beyond his/her business dealings.”
The Board then refers to the generally accepted dictionary meaning of the word “integrity” which reads: soundness of moral principles; the character of uncorrupted virtue, especially in relation to the truth and fair dealing, honesty and sincerity.
In her appeal, the appellant put forward information regarding steps she took to rectify her transgressions, including explaining that they could not invest in Kruger Rands via Old Mutual, and referring them to “…the advisor from the Kruger Rand company…”
Concerning the advisor referred to above she stated: “I was not aware of the intention of the advisor’s intention (sic) when he asked that the deposits must be made into the personal banking account then I was supposed to give the money to him later in cash.”
The Board responded: “Such explanation cannot be sustained if one has regard for the facts before us.”
It then notes: “Even though the panel acknowledges the appellant’s personal and financial challenges, it may only interfere if the decision of the Registrar was irregular or fatally flawed in law or on the facts. The discretionary power to determine periods of debarment is entrusted to the Registrar in terms of the FAIS Act. In this instance, we do not find such irregularity.”
Remorse as mitigation
This was the title of an article published last year in which we reviewed three Appeal Board cases concerning debarments.
It is interesting to note that, in two of the cases, the appellants were debarred for five years after submitting fictitious business which, in my view, is not nearly as serious as duping clients to pay money into one’s personal account. A likely reason for a mere two year debarment could have been the fact that the money was repaid before she was instructed to do so. The question that remains is whether this was done as a result of remorse, or whether it stemmed from the fact that she was found out.
In the last case in our article, we quoted the following from the Appeal Board finding:
Although the appellant was remorseful, the broken trust after such impeccable service for almost two decades, though noble, cannot simply be restored by an admission. Honesty and integrity are values which inform the choices an FSP makes at the point when faced with dire circumstances. That is the point when the standard of her or his moral judgment is tested.
An apology based on a guilty conscience, though a virtue, does not by itself restore the honesty and integrity lost through an act of deception. More may need to be done to meet the onerous standards of compliance required in the FAIS Act and the Code of Conduct.
In another case, The Appeal Board also referred to the decision in Swartzberq v Law Society, Northern Provinces 2008 (5) SA 322 (SCA) at p. 330 B-C. These authorities emphasize the importance of the transgressor’s appreciation of his or her wrongdoing:
“…it is for the appellant himself to first properly and correctly identify the defect of character or attitude involved and thereafter to act in accordance with that appreciation. For, until and unless there is such a cognitive appreciation on the part of the appellant, it is difficult to see how the defect can be cured or corrected …”