In what is believed to be the first arbitration award of its kind the CCMA has upheld an employer’s termination of a representative who was debarred in terms of section 14 of the Financial Advisory & Intermediary Services Act 37 of 2002 [“FAISA”].
How does a financial service provider [“FSP”] terminate the employment of a representative who is debarred in terms of FAISA? What procedure should be followed? What reason needs to be proved to ensure fairness and lawfulness?
In the CCMA arbitration award (NC1204-09 dated 18 August 2009) Metropolitan Life Ltd was held to have proved that the termination was fair because the true reason for termination was based on a combination of impossibility of performance and operational requirements. Metropolitan Life did not do what many employers do and adopt an all-or-nothing approach. A holistic approach was adopted and there was compliance with the common law and the relevant provisions of the LRA and the BCEA. After proper consultation with the employee Metropolitan Life paid him instead of notice together with severance pay calculated at the rate of 2 weeks for each year of service.
An FSP is required by FAISA to comply strictly with that Act, more particularly with regard to representatives. Clients of the FSP can insist on proof that representatives have service contracts or other mandates and that the FSP accepts responsibility for activities performed within the scope of or in the course of implementing such contract or mandate.
Apart from ensuring that representatives comply with any applicable code of conduct, and other applicable laws on conduct of business, the FSP must ensure that representatives are competent to act and have personal character qualities of honestly, integrity, competence and operational ability to fulfil the responsibilities imposed on them by FAISA.
Representatives who no longer comply with those requirements or contravene or fail to comply with any provision of FAISA, in a material respect, must be prohibited from rendering any new financial service by the withdrawal of any authority to act of behalf of the FSP and their names must be removed from the register.