Secondary

FAIS Ombud

Remorse as Mitigation in debarment cases

While, in the past, saying sorry and meaning it, assisted appellants, there are limits to what having regret can achieve.

Bhupesh Nathoo versus Registrar

In January 2016 we reported on an appeal by Mr Bhupesh Nathoo against being debarred for 5 years after the submission of two fictitious policies.

The Registrar submitted that if the Board orders a variation of the debarment period that such period should not be less than three years. The Registrar contended that the appellant’s misconduct was a serious transgression and that a period less than three years may in fact send the wrong message to the financial services community.

In its consideration of the appeal, the Board examined the extent to which the appellant had shown remorse.

The appellant admitted the wrongfulness of his conduct and expressed his regret for what he had done. This was highlighted in the fact that the appellant stated his preparedness to work only as a representative under someone else’s supervision and not to operate on his own. We were satisfied that the appellant showed remorse and that he appreciated the error of his ways.

The appellant’s personal circumstances were also taken into account, in particular the fact that the appellant is 53 years old and is the sole breadwinner who has no expertise in other fields outside of the financial services sector (from which he has been disbarred).

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 …”

The appeal was upheld, and the period of sanction reduced from five years to two and half years calculated from date of the Registrar’s decision.

Mondisa Cindi versus Registrar

In this case, which also ended up at the Appeal Board, the respondent had also submitted three fictitious policies and made a client sign documents under false pretences.

Apart from the valid argument that due process was not followed, the appellant admitted that her conduct was improper, and pointed out that she never disputed the findings of the forensic unit against her. She also pointed out that she not transgressed again while at her new employer.

Using the principle of “fairness to all”, the Appeal Board reduced the debarment period from five to three years.

Coetzer versus Registrar

The latest Appeal Board case contains very similar transgressions and appeals for leniency on the same grounds as the cases mentioned above.

The appellant forged a document requesting a premium increase, resulting in commission being paid to him. Previously, he also wrote a letter on behalf of the client and forged the signature, although it appears that there was no financial gain for the appellant in this instance.

In response to the notice of intent to debar, the appellant “…raised a number of personal and professional challenges which contributed to his “impugned conduct”. He openly admitted his wrongdoings, and offered to refund all monies.

Taking this into account, the Registrar imposed a 3-year debarment instead of the 5-year period initially intended for the appellant, but maintained the 5-year penalty on the FSP.

After an oral hearing, the Appeal Board found that the appellant was indeed sincere, but expanded as follows:

Although Mr Coetzer 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 FATS Act and the Code of Conduct. Thus, in the view of the Appeal Panel, and on balance, however dire, all the mitigating circumstances presented, might have mitigated the 5-year debarment initially intended but could not have a sufficiently mitigating effect on the ultimate 3-year debarment imposed, to exonerate Mr Coetzer from his actions.

In addition, the Appeal Board also considered the appellant’s standing in the industry.

Quoting from the famous Durr vs ABSA Bank ruling in 1997, the Registrar argued that the conduct of the appellant “…should be compared to those of an FSP in his own league, and not of one who is inexperienced, or of an average standard.”

The appeal was dismissed.

Please click here to read the full decision.

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