Stretching the boundaries beyond credibility

Access to free informal dispute resolution mechanisms was guaranteed to attract the attention of those with nothing to lose. Two recent decisions by the Financial Services Tribunal confirm the lengths to which some people will go to achieve an outcome in their favour.

In the first case, the applicant appears to follow the very popular Stalingrad tactic after being dismissed and debarred by a bank for disclosing confidential information, which, among other things, contravened his contractual obligations inscribed in the Code of Banking Practice, the Articles of Agreement, the Protection of Personal Information Act and the FAIS Act.

The applicant pleaded guilty at the debarment proceedings.

The somewhat terse decision by the Tribunal reads:

“The applicant applies for the reconsideration of his debarment under section 230 of the Financial Sector Regulation Act 9 of 2017. He previously applied for the suspension of his debarment, which was refused. He then applied for a reconsideration of that decision, which was also dismissed.”

We await the next round in this saga with bated breath.

Background to the second case

In 2014, someone presented a cash cheque for R98 000 to a teller at the bank for the credit of a CC. Soon thereafter, R93 012 was transferred out of the CC’s bank account by means of an EFT. The cheque, drawn on another bank, was dishonoured. The CC’s account was debited with the amount of the dishonoured cheque.

Because the CC’s account was now overdrawn, interest accrued, and the two members of the CC became liable because of their suretyship. It took the bank some months to accept that the cheque and the withdrawal were part of a fraudulent scheme. Eventually, on 26 January 2015, the parties entered into a settlement agreement, and the bank refunded the stolen amount and wrote back interest and costs.

‘Application for reconsideration of a (non-)decision of the FSCA’

The application to the Tribunal for the reconsideration of a “decision” or “decisions” (or lack of them) by the FSCA arises from a series of complaints submitted by the applicant against the second respondent, the bank.

Interestingly, the Tribunal notes: “A ‘decision’, for present purposes, is defined in section 218 and is ‘a decision by [the FSCA] in terms of a financial sector law [such as the FSR Act itself] in relation to a specific person’ and includes ‘an omission to make such a decision within a reasonable time…’”

As an aside: My first thought was that, if this also applies to the FAIS Ombud, all the outstanding property syndication cases could be resolved at once.

The applicant launched, what was under the rules of the Tribunal supposed to be “concise”, a reconsideration application of 273 pages.

In response, the FSCA filed a five-page “points in limine”, stating that the applicant’s application is frivolous, as it contains no grounds of any merit for the Tribunal to consider and the applicant is not an aggrieved person as envisaged by section 230(1)(a) of the Act, i.e., someone who is legally aggrieved and not merely someone with grievances.

In answer, the applicant filed 125 pages of heads of argument (the Rules provide a 25-page limit) and a 36-page application for filing new evidence.

The FSCA responded with four pages, and the applicant filed further heads running to 79 pages.

The applicant asked the Tribunal to decide the reconsideration application in his favour and not refer it back to the FSCA for reconsideration because of bias and other “improper” conduct on the part of the FSCA.

At the original complaint, the FSCA found, and it is not disputed, that the bank paid everything it undertook to pay, and the CC was placed in the same position it had been before the fraud. The agreement was a full and final settlement of all claims that could have arisen because of the fraud.

The FSR Act came into effect on 1 April 2018, and thereafter the applicant (knowing that claims against the bank had become prescribed) filed a complaint against the bank with the FSCA, alleging 13 transgressions of a variety of laws.

The Tribunal notes, under paragraph 18: “The precursor of the FSCA was, in part, the Financial Service Board. The FSB did not, however, have jurisdiction over banks. The FSR Act does not have retrospective operation, and complaints preceding 1 April 2018 do not fall under the jurisdiction of the FSCA…”

The FSCA explained this to the applicant in letters dated 27 October and 19 November 2021 and closed its investigation. It is this “decision” that gave rise to the present application.

“Eventually, it transpired that a money claim was dressed up as a crusade in the public interest. What the applicant wants is an ‘order’ or decision by the FSCA ordering the bank to pay him more than R14.8 million as consequential restitution damages caused by the 2014 cheque fraud. In addition, the FSCA should order the bank to pay him punitive damages of an unquantified amount.”

In closing, the Tribunal’s frustration with this matter is expressed as follows:

“The level of the debate may be illustrated with an example (there are others) raised by the applicant during argument. The bank recently sent him a letter stating that it was ending all business relationships with him. There were none. The letter, the applicant says, is ridiculous but the FSCA must identify the author and establish why the letter was written, and then it must issue an order or directive. When asked whether the directive should be that the bank may not write ridiculous letters, the applicant said that is not what he had in mind but did not inform us what he had in mind: the Tribunal or the FSCA should fashion some or other ‘decision’ or order.”

The application for reconsideration was therefore dismissed.

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