Secondary

debarment

Tribunal doesn’t accept debarred rep’s attempt to walk back admission

The Financial Services Tribunal (FST) as upheld the FSCA’s decision to debar a life insurance representative who admitted that she submitted unauthorised policy applications but subsequently sought to qualify her admission.

What is interesting about this case is that it provides clarity on the process involved when the FSCA debars a rep, rather than the FSP.

Sanlam employed Tarryn Pillay as a representative in 2018. After she resigned the following year, Sanlam found that she had earned commission of nearly R200 000 on policies that lapsed because the first premium was not paid.

In its forensic investigation, Sanlam attempted to contact the nine policyholders involved, but could locate only three.

The findings of the investigation were:

  • One client confirmed in writing that policies were submitted without his knowledge or consent.
  • Two clients confirmed telephonically that policies were submitted without their knowledge.
  • Invalid or closed bank account numbers were used on eight of the unauthorised policy applications.
  • Two clients had not signed the policy applications, according to the forensic document examiner.

In addition, Pillay admitted her wrongdoing:

“I unreservedly apologise for my conduct in respect to the policies which are discussed in your report. Without describing in any detail, and with use of your report and guide, I accept your findings. On joining Sanlam, I was pressurised to produce the goods and meet targets. I did not want to fail. I ought to have written up the policies more correctly. I ask the company to apply leniency and to arrange for me to settle any amount due on appropriate terms.”

Sanlam could not institute debarment proceedings because of the time bar in section 14 of the FAIS Act. It therefore submitted its report to the FSCA, which debarred Pillay for five years in terms of section 153(1)(a) of the Financial Sector Regulation Act (FSRA).

Pillay applied to the FST for reconsideration of her debarment on procedural and substantive grounds.

The tribunal dismissed the procedural issues raised by Pillay:

  • The time frames set by section 14 of the FAIS Act. These did not apply, because she was debarred by the FSCA, not an FSP, in terms of the FSRA, where similar time constraints do not apply.
  • The FSCA did not provide her with the underlying documents it received from Sanlam. The Authority told her of the documents and their contents. She did not ask for copies because Sanlam had already provided them to her.
  • Sanlam did not hold a debarment hearing. It could not, because she was debarred by the FSCA. Pillay was told what the case against her was, and she was given the opportunity to respond. Her response was considered, and the final debarment issued.

‘Email wasn’t an admission of wrongdoing’

In her response to the FSCA, Pillay sought to clarify that her email to Sanlam should not be viewed as an admission of wrongdoing.

The “conduct” for which she apologised was that Sanlam had failed to check the policy applications before accepting them.

The findings that she “accepted” related to Sanlam’s “lapses” and “irregularities”, which were not identified.

The statement that she should have written up the policies “more correctly” meant that she should have met the clients at their homes or with the assistance of Sanlam, and she did not do background checks because she assumed that Sanlam would have done so.

The tribunal found that Pillay’s attempt to qualify and distance herself from “the clear words of her admission” in the context of the allegations made against her was “contrived” could not succeed.

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