On 30 July 2024, the Financial Services Tribunal handed down its decision in a reconsideration application in terms of section 230 of the Financial Sector Regulation Act, 2017 (“FSR Act”). The application was instituted by Bongani Progress Masela (“Mr Masela”) against Momentum Insure Company Limited (“Momentum”). Momentum, a financial services provider, debarred Mr Masela as a financial services representative in terms of section 14(1) of the Financial Advisory and Intermediary Services Act, 2002 (“the FAIS Act”). The reason for the debarment, as set out in Momentum's notice of intention to debar, was because Mr Masela no longer met the requirements of honesty and integrity as envisaged by the FAIS Act.
Prior to his dismissal, Mr Masela was employed by Momentum as a financial services representative. The reasons for the debarment stem from a claim brought by a Momentum client for a motor vehicle accident. Mr Masela failed to include a car hire option in the client's policy which resulted in the client being provided with a courtesy car for a period of only 30 days. Given that the claim was not finalised within that period, the client requested Mr Masela to extend the courtesy car's use.
Momentum alleged that it was at this point that Mr Masela informed the client that he knew of someone who could assist her with the courtesy car extension but that person required payment of ZAR1200.00. According to the client, Mr Masela insisted that they meet privately and in person for her to pay him the money in cash. After the meeting, Mr Masela provided the client with the name and cell phone number of Lerato, who was to do the extension for the client. When the client attempted to call Lerato, the number was invalid and the client did not receive the service paid for.
Momentum argued that Mr Masela should have referred the client to its claims department, as he had no authority to grant the extension for the use of a courtesy car. For these reasons, Momentum was of the view that his conduct clearly indicated his intention to solicit payment from the client to bypass standard procedures.
Mr Masela denied accepting a bribe from the client for purpose of extending the use of the courtesy vehicle by the client. He claimed that the money paid to him was related to repairs to the courtesy car's tyre. In addition, Mr Masela stated that the WhatsApp messages exchanged with the client were related to him assisting her with hospital visits, doctor appointments and running errands for groceries.
In debarring Mr Masela, the decision maker relied on the findings of the chairperson from Mr Masela's disciplinary hearing. In addition, it was recorded that Mr Masela was negligent in not providing the car hire service to the client resulting in Momentum having to pay for the car hire and delaying the processing of the client's claim. The chairperson also relied on the WhatsApp messages between the client and Mr Masela in finding that Mr Masela was guilty of the charges against him.
Consequently, Mr Masela was dismissed on 17 August 2023 and was later invited to attend a debarment hearing on 4 December 2023. In its notice of intention to debar, Momentum stated that its reasons for debarring Mr Masela were that he failed to comply with the proper processes to extend the client's courtesy car and had received money from the client to bypass the standard procedure. This exposed the client to financial harm and Momentum to serious reputational damage.
In the reconsideration application, Mr Masela argued that he did not take a bribe from the client for purpose of extending the use of the courtesy car and therefore did not breach Momentum's policy. Mr Masela maintained that he ran errands for the client and the money he received from the client was paid to the person who was supposed to repair the damage to the tyre of the courtesy car. Mr Masela also complained that the client was not called as a witness nor was there an affidavit from the client confirming her version of the events.
Lastly, Mr Masela stated that he had referred the matter to the CCMA and was paid ZAR40 000 by Momentum, which Momentum has refused to disclose what the payment related to. The Tribunal considered the various WhatsApp exchanges between Mr Masela and the client whereby Mr Masela and the client had discussed the ZAR1200.00.
The Tribunal also noted that no investigation was conducted by Momentum and that the testimony of a Momentum employee was limited testimony. The employee alleged that Mr Masela was negligent in not providing the client with the car hire service, that Lerato could not be traced and that the contact number provided by the client for this person did not exist.
Secondly, the Tribunal noted that a reading of the WhatsApp messages does not make mention of the client requesting assistance with the extension of the use of the courtesy car or that the ZAR1200.00 was intended for that purpose. Momentum conceded to this point. In addition, the Tribunal noted discrepancies between the testimony of the Momentum employee and what appeared in the WhatsApp messages.
The Tribunal further noted that the client never disputed the fact that Mr Masela ran errands for her and in fact made reference to putting petrol in Mr Masela's car and buying him food. According to the Tribunal, what was apparent was that Mr Masela and the client had met, whereby he assisted the client by running errands for her. The client in turn purchased petrol for Mr Masela and bought food for him. The relationship between the pair broke down when certain monies were not paid to the client, leading her to report Mr Masela.
In closing, the Tribunal stated that the WhatsApp messages, which appear to be the best evidence obtained by Momentum for debarring Mr Masela, did not support the allegations that Mr Masela took money from the client in exchange for assisting her with the extension. There was insufficient evidence to support the allegation that Momentum's policies had been breached.
The Tribunal accordingly set aside the decision to debar Mr Masela.
The above case illustrates the vital role the Financial Services Tribunal plays in safeguarding financial services representatives from unjust debarment by their employers. This is of particular importance, considering that debarment proceedings are largely conducted internally which may taint the impartiality of these proceedings.
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