Fais Compliance - Compassion not an alternative to Compliance
The latest ruling by the Appeal Board reaffirms the fact that there really is no alternative, harsh as it may sound.
The appellant appealed against the withdrawal of his licence by the Registrar. This decision was based on no less than ten instances of non-compliance with the provisions of the FAIS Act.
Some of the grounds on which it was withdrawn included:
- Repeated failure to pay the prescribed levy and interest thereon;
- Repeated failure to successfully complete the required first level regulatory examination;
- Failure or inability to maintain suitable guarantee or professional indemnity or fidelity insurance cover (professional indemnity cover);
- Failure to register with the FIC as accountable institution (FIC registration).
The Appeal Board states:
“The facts are not in dispute, also not that the appellant had been given repeated warnings and extensions to enable him to comply. The appeal is in essence a plea ad misericordiam — an appeal to compassion and pity while the function of this Appeal Board is to determine whether the Registrar was right or wrong.”
“The problem is that the appellant did not appear at the hearing. Although he had previously indicated that he would be represented and that two persons would attend the hearing he sent an email at about 15.00 on the day before the hearing stating that he had fallen ill and that he would send a doctor's note the next day.”
“When the appeal was called there was no appearance, no application for postponement and no doctor's note.”
“Although the Registrar wished to proceed with the appeal in the absence of the appellant we decided that the proper course to adopt is to strike the appeal from the roll because of non- appearance. If the appellant wishes to prosecute the matter he will first have to file a proper application for condonation and reinstatement of the appeal.”
From the use of the word “repeated” in the grounds for the withdrawal of the appellant’s authorization, it is quite apparent that the Registrar showed compassion for appellant’s problems. There has to come a time, though, when the line has to be drawn.
Sadly, this often happens to older folks who have no other means of making a living, which is one of the tragedies resulting from the need for stricter regulation of the industry from 2004 onwards.
It is doubtful whether the Appeal Board would have been able uphold the appeal on compassionate grounds. As indicated above: “…the function of this Appeal Board is to determine whether the Registrar was right or wrong.”
The appeal documents only list four of the ten grounds for the withdrawal of the authorisation. Whilst some, like the repeated failure to pay levies or pass the regulatory exams cannot be blamed on ignorance, matters such as failure to effect PI cover, or to register with the Financial Intelligence Centre may be the result of not knowing about the requirements. Ignorance is, unfortunately, not an acceptable excuse in law.
It also appears from the above that the appellant may well have made use of the facility offered by the Registrar to request for exemptions to pay levies or RE deadlines, but this can only be extended so far.
Nevertheless, and harsh as it may sound, the outcome is inevitable.
There is a lesson to be learnt from this. There is unfortunately no alternative but to comply with legal provisions if you want to stay in the business.
Click here to read the Judgment on the FSB website.
Paul Kruger: Moonstone Compliance (Pty) Ltd
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