To display honesty and integrity, are two vital characteristics of being a representative, as per Section 6A of the Financial Advisory and Intermediary Services (FAIS) Act, 37 of 2002 and Section 8 of the FAIS Board Notice 194 of 2017. Any violation of this could lead to a debarment.
The recent matter of N P Malahlela v Nedbank Limited, presented before the Financial Services Tribunal provides crucial guidance around the importance of professional ethics, financial services regulation, and procedural fairness. The case revolved around Mr. Nkamogeleng Phillip Malahlela’s debarment following allegations of dishonesty and failure to meet the “fit and proper” requirements under the FAIS Act, 37 of 2002.
Mr. Malahlela, a former representative of Nedbank Limited, was debarred following an internal investigation that revealed he had sent 53 emails containing 895 attachments of confidential client information to his personal email address before resigning. Nedbank issued a cease-and-desist letter on 11 April 2024, and immediately suspended him.
Nedbank proceeded with disciplinary action. The disciplinary hearing found him guilty of gross misconduct and dishonesty, leading to his termination on 30 April 2024. Subsequently, Nedbank formally notified him of its intention to debar him under Section 14 of the FAIS Act. Mr Malahlela challenged his debarment on the basis of both procedural and substantive fairness. This was rejected by the Tribunal on the grounds that the procedure followed by Nedbank was fair and complied with the relevant sections of the FAIS Act, as well as that the actions of Mr. Malahlela were dishonest.
The N P Malahlela v Nedbank Limited case highlights the strict ethical and legal standards governing financial services professionals. The ruling reinforces that honesty, integrity and compliance with industry regulations are non-negotiable attributes for Representatives.
While Malahlela’s long service and personal circumstances were considered, the Tribunal determined that his unauthorised transfer of confidential information compromised his fit and proper status, particularly his honesty and integrity, justifying the debarment.
This case serves as a crucial precedent for financial institutions, demonstrating the importance of data security, ethical conduct and adherence to financial regulations. It also underscores the necessity for Representatives to act with utmost integrity, as any breach of trust can have severe professional consequences.