The FSB published a notice on 20 October 2017 to withdraw the document titled “Guideline on the Determination of Reappointment of Debarred Representatives”, published on 13 July 2011.
The Financial Sector Regulation Act (FSRA) brings significant changes to the debarment procedure set out in the FAIS Act. Section 14 of the FAIS Act which deals with the debarment of representatives by authorised FSPs has been substituted with a new set of requirements. Section 14A of the FAIS Act which granted powers to the Registrar to debar a person, including a representative, has been repealed as this is now dealt with under the FSRA.
In terms of the new requirements, an FSP must ensure that the debarment process is lawful, reasonable and procedurally fair. The FSP will be required to give acceptable notice in writing to the representative stating the FSP’s intention to debar the representative, the grounds and reasons thereof, and any terms or conditions attached to the debarment.
All FSPs are required to have a document, setting out the policies and procedures for debarment of representatives that is lawful, reasonable and procedurally fair.
The new debarment provision which replaces the ‘old’ Section 14, reads as follows:
Financial Sector Regulation Act, 2017. Part 5 Debarment of individuals
- (1) The responsible authority for a financial sector law may make a debarment order in respect of a natural person if the person has—
(a) contravened a financial sector law in a material way;
(b) contravened in a material way an enforceable undertaking that was accepted by the responsible authority in terms of section 151(1);
(c) attempted, or conspired with, aided, abetted, induced, incited or procured another person to contravene a financial sector law in a material way; or
(d) contravened in a material way a law of a foreign country that corresponds to a financial sector law.
(2) A debarment order prohibits the natural person, for the period specified in the debarment order, from—
(a) providing, or being involved in the provision of, specified financial products or financial services, generally or in circumstances specified in the order;
(b) acting as a key person of a financial institution; or
(c) providing specified services to a financial institution, whether under outsourcing arrangements or otherwise.
(3) A debarment order in respect of a natural person takes effect from—
(a) the date on which it is served on the person; or
(b) if the order specifies a later date, the later date.
(4) (a) A natural person who is subject to a debarment order may not engage in conduct that, directly or indirectly, contravenes the debarment order.
(b) Without limiting paragraph (a), a natural person who is subject to a debarment order contravenes that paragraph if the natural person enters into an arrangement with another person to engage in the conduct that directly or indirectly contravenes a debarment order on behalf of, or in accordance with the directions, instructions or wishes of, the natural person who is subject to the debarment order.
(5) A licensed financial institution that becomes aware that a debarment order has been made in respect of a natural person employed or engaged by the financial institution must take all reasonable steps to ensure that the debarment order is given effect to.
(6) The responsible authority that made a debarment order may, by order and on application by the debarred natural person—
(a) reduce the period of the debarment order; or
(b) revoke the debarment order.
(7) The responsible authority must publish each debarment order, and each order under subsection (6), that it makes.
- (1) Before making a debarment order in respect of a natural person, the responsible authority must—
(a) give a draft of the debarment order to the person and to the other financial sector regulator, along with reasons for and other relevant information about the proposed debarment; and
(b) invite the person to make submissions on the matter, and give the person a reasonable period to do so.
(2) The period contemplated in terms of subsection (1)(b) must be at least one month.
(3) In deciding whether or not to make a debarment order in respect of a natural person, the responsible authority must take into account at least—
(a) any submission made by, or on behalf of, the person; and
(b) any advice from the other financial sector regulator.
Where person cannot be located
- If a responsible authority after taking all reasonable steps, including through electronic means, cannot locate a person to be given a document or information under section 154 or a debarment order, delivering the document or information to the person’s last known e-mail or physical business or residential address will be sufficient.