On 7 October 2015 the FSB appeal board heard an appeal against a decision of the Registrar debarring the appellant from rendering financial services to clients on behalf of any authorised FSP. The appellant was employed as a financial advisor and her debarment was set for a period of two years by the Registrar who stated that she no longer satisfied the fit and proper requirements regarding her personal character qualities of honesty and integrity.
The employer conducted an internal investigation after receiving a complaint
Her employer received a complaint against the advisor whereby they started conducting an internal forensic investigation into the allegations. The report of the investigation revealed that she misrepresented information to her employer by submitting unauthorised business where clients’ signatures were falsified on the final declaratory forms. She was paid commission for the policies containing falsified information.
All of the clients whose signatures were falsified were informed and they gave sworn affidavits disputing that they had taken out the policies. They all indicated that their personal information was available to her based on previous dealings with her. They denied signing the final policy declaratory forms. Additionally, her employer collected specimen signatures from three of these clients for expert analysis who concluded that the signatures on the application forms were indeed falsified.
The Registrar’s decision
The Registrar debarred the financial advisor for two years owing to the mitigating circumstances in her defence. She admitted that the signatures were falsified, but not by herself, but by her former husband. She also did not dispute that she submitted the policy applications to her employer whilst having full knowledge that they were forged documents. In her own words she stated that:
“At the time I was in a serious abusive relationship with my ex-husband who was also my manager and boss at the time. Due to this abusive relationship and undue pressure, I was in a situation where it was ‘do as he says or face the wrath’. I was honestly not thinking straight under these circumstances and never realised the consequences.”
The admirable aspect of this case was that the appeal board stated that it cannot undermine the serious issue of spousal abuse as it does affect women in our society and the impact it has on survivors. They therefore did not deem it necessary to question her submissions in relation to her abusive relationship.
The FSB Appeal Board’s findings
In considering her appeal, the appeal board pointed out to the following facts:
- All the clients whose signatures were falsified attested thereto.
- That it is certainly more than a coincidence that she made the same mistake on all of the ‘Finalisor Declaration Forms’ in relation to all the clients around the same time.
- The appeal board stated that in this day and age of technological sophistication and access to technology, it is astonishing for her to claim that she could not contact these clients in an alternative way to inform them of the illegalities happening in their names. This defence the appeal board viewed as astonishing and highly unlikely.
- If she was not a party to the falsification scheme and she truly had the interests of her clients at heart, her integrity should have dominated by finding the means, time and opportunity to report the incident to her employer. She therefore did not show sufficient honesty and strength to take the earliest opportunity to counter her abusive husband’s fraudulent actions.
The question which the appeal board was therefore faced with was whether she can be trusted to withstand similar conduct in future dealings with clients?
In defending her conduct, she argues that she is now divorced from her abusive spouse and she will no longer be subjected to his undue pressure. The appeal board stated that this defence is not of much assistance as it does not show her own honesty, integrity and strength of character in similar circumstances.
The appeal board finding was that they agree with the Registrar and that her two-year period debarment is minimal and most appropriate. She failed the overall test in that she did not exercise due care to take into account the financial interests of her clients and the integrity of the financial industry. She did not demonstrate the slightest effort to serve the interests of her clients.
Also, the appeal board highlighted that the role of an FSP is critical in determining and providing financial security for those who place their trust in their hands. The contrary cannot be tolerated as it places an ‘unsuspecting’ public at risk. The appellant must take responsibility for her own dishonest actions and cannot merely point a finger at her spouse for her own actions.
Keep in mind the General Code of Conduct
We would like to highlight Section 2 of the General Code of Conduct which requires that providers at all times render honest and fair services with due care, skill, diligence and in the interests of their clients. Services of an FSP must also take into account the integrity of the industry.
Also important to note is Section 3(1)(f) of the Code which demands that the service of FSPs must be rendered in accordance with an existing contractual relationship and the reasonable request or instruction of the client. It is therefore important that a mandate or appointment document is signed by the client prior to advice being given, and that such advice is in the interests of the client.
Click the link below to download the full appeal decision:
FSB Appeal Decision – AGM Coetzer (nee Kriel)