In the 22 July 2015 issue of Mastering Compliance, we spoke about the Debarment of Representatives and the burden it places on an FSP. We now look at a guideline regarding the process of reappointment of debarred representatives.
A debarment in terms of section 14(1) of the FAIS Act, means that the provider prohibits a representative who no longer complies with the fit and proper requirements from rendering financial services and removes his/her name from the register of representatives. The debarment prevents the representative from functioning as a representative of any provider, not only for the provider who brought about the debarment. However, if the representative is subsequently of the view that he/she is fit and proper, he/she may request a financial services provider to reappoint him/her.
Before reappointing the representative, the provider must make sure that it follows the correct process for the reappointment of a debarred person as a representative.
It is the duty of the provider to ensure that their representatives are fit and proper
The Registrar does not assess the fitness and propriety of representatives. If the Registrar is of the view that a representative is not fit and proper, the Registrar must take action against the provider for not complying with section 13(2) of the Act.
Requirements for reappointment of debarred representatives
In terms of Board Notice 82 of 2003, an applicant for reappointment as a representative must be a person who, on the date of reappointment, met the following requirements:
- at least 12 (twelve) months since the debarment date must have elapsed, unless the debarment was due to the Representative not meeting the qualification requirement and has, within that period, now qualified;
- all unconcluded business of the former representative, must be properly concluded;
- all complaints or legal proceedings (if any) or other administrative or legal procedures or proceedings in which the applicant was directly or indirectly involved prior to the debarment date, must have been properly concluded; and
- all the fit and proper must be complied with.
FSP and Representative must provide the Registrar with evidence of reform
It is important to note however that a representative will not be removed automatically from the list of debarred representatives as soon as a period of twelve months has lapsed. The FSP who wishes to reappoint such a representative, must request the Registrar of Financial Services Providers to remove the debarred representative from the database of debarred representatives.
The FSP must provide the Registrar with sufficient evidence of the representative’s honesty and integrity in the form of affidavits or testimonials and must include the reasons why it is satisfied that the representative is now fit and proper. The debarred representative is also required to submit an affidavit stating reasons why he/she is of the view that he/she is now fit and proper.
This must be able to convince the Registrar that the person has undergone a complete and permanent transformation and that no defects in the person’s character exist which could affect his/her fitness and propriety. The Registrar must be able to see from the evidence submitted that the representative will in the future conduct him/herself in a professional manner and will perform their duties in the best interest of their clients as well as in the best interests of the integrity of the industry.
In must be noted however that even if these requirements have been met to the satisfaction of the Registrar, the application may still be rejected where a representative was debarred for serious cases of contravention of the Act and the General Code of Conduct. It is in these cases where lifting a debarment would not be in the best interest of the profession and its integrity.
The process followed by the Registrar
Once the Registrar receives an application from the re-appointing FSP of the debarred representative, the FSP that debarred the representative in the first place (as it is not always the same FSP) will be contacted in order to establish whether such representative’s unconcluded business has been properly concluded. Such information must be submitted to the Registrar in the form of an affidavit. The Registrar will consider all facts and information made available in support of the removal of the debarment. Once the Registrar has made a decision, the debarred representative will be notified in writing.