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[2020] ZAEQC 2
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Maharaj v Financial Sector Conduct Authority (A7/2019) [2020] ZAEQC 2 (17 January 2020)
FINANCIAL
SERVICES
TRIBUNAL
A7/2019
In
the matter between:
SHANEEL
MAHARAJ
Applicant
And
FINANCIAL
SECTOR
CONDUCT
AUTHORITY
Respondent
Coram:
LG Nkosi -Thomas SC, N. Nxumalo and Z. Mabhoza
Summary:
Reconsideration of the FSCA decision declining an application to
exempt the applicant from the qualification requirement
in terms of
section 44(1) and (4) of the FAIS Act read with those of section 281
of the FSR Act. Application dismissed for failure
to make out a
proper case for relief under the applicable sections.
DECISION
A
INTRODUCTION
1.
This
is an application in terms of section 230 of the Financial Sector
Regulation Act 9 of 2017
(FSR
Act)
for
the reconsideration of the decision of the Financial Sector Conduct
Authority (the FSCA), dated 27 May 2019
[1]
.
2.
The
above decision was a sequel to the applicant's application, submitted
on 1 May 2019, for his exemption
[2]
from compliance with following:
2.1.
the
qualification requirement prescribed in the Determination of Fit and
Proper Requirements for Financial Services Providers, 2017
("the
Fit and Proper Requirements'')
[3]
;
and
2.2.
the
requirements to pay the fee as prescribed in paragraph 3.3 of the
Determination of Fees payable to the Registrar of Financial
Providers.
[4]
3.
That
application was based on following broad bases:
3.1.
that since the
qualification that he obtained in May 2009 does not meet the
requirements of the FSCA to be appointed a representative
he wishes
to be exempt from the above requirements; and
3.2.
that despite
having been a representative since March 2013, he was only made
aware, on April 2019, that his existing qualification
does not meet
the requirements
of the FSCA.
4.
On 27 May
2019, the FSCA declined the application to exempt the applicant
from the
qualification requirement in terms of section 44(1) and (4) of the
FAIS Act (henceforth referred to as
"the
impugned
decision") in the following terms:
"5.
The Authority has considered the application
for
exemption and your circumstances
as
set out therein and is not
satisfied that reasonable grounds exist to warrant an exemption from
the qualification requirements. The Authority is of the view
that if an exemption is granted as contemplated it would conflict
with
the public interest, prejudice the interests of clients and
frustrate the achievement of the objects of the
Financial Advisory
and Intermediary Services Act, 2002
.
6
.
In
light of the above, and the reasons set out in the Authority's letter
dated 14 May 2019, the application for exemption from the
qualification requirements is declined."
B.
BEFORE THIS
TRIBUNAL
5.
As
stated, the applicant brought this application in terms of section
230 of the FSR Act for a reconsideration of the impugned decision
[5]
.
6.
The
grounds for the application appear from, inter alia, an undated
document captioned
"Motivation
for appeal of decision".
[6]
In
it, the applicant states, inter
alia,
that:
6.1.
He only found
out in 2019 when he applied for a representative role that the
qualification he holds does not meet the requirements
of the FSCA;
6.2.
He
requests
exemption
from
the
applicable
requirements
pending
his completion
of an approved and accredited course; and that
6.3.
He
honestly did not know that the qualification he currently holds does
not meet the requirements.
7.
Before us, the
FSCA opposed the application for exemption on grounds that the
application amounts to an abuse of process and that
it is frivolous
and vexatious within the contemplation of section 234(4) of the FSR
Act inasmuch as it is was improperly issued
without reasonable
grounds and that, on the merits, the applicant has simply failed to
make out a proper case for the relief sought.
8.
On 12 July
2019 and by way of a letter, the FSCA advised the secretariat of this
Tribunal that the reasons for the impugned decision
are contained in
its letter of 27 May 2019 and proceeded to tabulate therein the facts
and information upon which the impugned
decision is based.
9.
In
its letter of 27 May 2019, the FSCA stated that the reasons for the
impugned decision are to be found in its earlier letter of
14 May
2019.
[7]
There, the following
reasons are, inter alia, proffered:
9.1.
In terms of
section 23 of the Fit and Proper Requirements, a representative must
have a qualification recognised by the FSCA;
9.2.
In terms of
section 4(4) of the Exemption of Services under Supervision in terms
of the Requirements and Conditions, 2008 ("the
2008 Exemption of
Services under Supervision"), a representative may work under
supervision for a period not exceeding six(6)
years after
date
of
first
appointment,
whilst
obtaining
the
required
qualification and must obtain a recognised
qualification
by a certain
date therein specified;
9.3.
On 1 February
2019, the 2008 Exemption of Services under Supervision was withdrawn;
9.4.
In
terms of the provisions of the Exemption of Services under
Supervision No. 2 of 2018,
[8]
a
supervised representative must within six years from the date of
first appointment as a representative of a specific financial
product, comply with the qualification requirement for that specific
financial product;
9.5.
The applicant
has had more than six (6) years since date of first appointment to
comply with the qualification requirements but
had failed to take
steps to obtain such a qualification;
9.6.
One of the
objectives of the Financial Advisory and Intermediary Services Act,
2002 ("the Act") is to professionalise
the financial
services industry and to protect consumers hence the imposition of
the qualification requirements;
9.7.
The National
Treasury has expressed South Africa's commitment to
a global
financial regulatory reform agenda aimed at strengthening financial
stability such to entail a strong regulatory framework,
supervision
and a proscription of financial service providers operating outside
of the regulatory framework;
9.8.
The
applicant's conduct constitutes a total disregard of the peremptory
requirements of the Act;
9.9.
The FSCA is
not persuaded that reasonable grounds warranting an exemption exist
and holds the view that granting an exemption, in
the circumstances,
would be in conflict with the public interest, would prejudice the
interests of the consumers of the financial
service rendered and
would frustrate the achievement of the stated intention of the Act.
10.
Significantly,
the applicant was afforded the opportunity to address these concerns
by the FSCA before the publication of the impugned
decision. The
applicant not only failed to frontally address these issues in his
response to the FSCA but also failed so to do
in the application for
the reconsideration of the impugned decision currently before this
Tribunal.
C.
THE APPLICABLE
STATUTORY PROVISIONS AND ANALYSIS
11.
Section 44(1)
of the Act provides, in material part, that:
"44
Exemptions by registrar and Minister
(1)
The
registrar may on or after the commencement
of this
Act, but prior to the date determined by the Minister in terms of
section
7
(1), exempt
any person or category of persons from the provisions
of
that
section if the registrar is satisfied that-
Act."
(a)
the
rendering of any financial service by the applicant is already
partially or wholly regulated by any other law;
or
(b)
the
application
of
the said
section to the applicant will cause the applicant or clients
of
the
applicant financial or other hardship or prejudice; and
(c)
the
granting of the exemption will not
(i)
conflict
with the public interest;
(ii)
prejudice
the interests of clients; and
(iii)
frustrate
the
achievement
of
the
objects
of
this
12.
Section
44(4), in its turn, provides that:
"(4)
(a) The registrar may in any case not provided for in this Act, on
reasonable grounds, on application or on the registrar's
own
initiative by notice on the official web site, exempt any person or
category of persons from any provision of this Act."
13.
Section 281 of
FSR Act is equally implicated in this case. It provides, in material
part, that:
"281
Exemptions
(1)
The
responsible authority for
a
financial
sector law may, in writing and with the concurrence of the other
financial sector regulator, exempt any person or class
of persons
from a specified provision of the financial sector law, unless it
considers that granting the exemption-
(a)
will be
contrary to the public interest; or
(b)
may
prejudice the achievement of the objects of a financial sector law.
(2)
Subsection
(1) applies to the granting of exemptions if
a
financial
sector law does not provide
a
power to
grant exemptions.
(3)
If
a
financial
sector
law
provides
a
power
to
grant
exemptions,
the responsible authority must-
(a)
grant
the exemption in terms of the relevant provisions of the financial
sector law; and
(b)
when
deciding whether to grant an exemption, comply with the requirements
of subsection (1) in addition to any requirements specified
in the
financial sector law.
(4)
The
responsible authority must publish each exemption."
14.
Additionally,
section 23 of the Fit and Proper Requirements of 2017 and the 2008
and 2018 Exemptions of Services under Supervision
referred to above
are implicated.
15.
Cumulatively,
these sections provide the FSCA with statutory authority grant an
exemption from compliance with a financial sector
law on reasonable
grounds shown. The following are the jurisdictional factors for the
exercise of this
statutory
authority
:
15.1.
That the
rendering of the service by that person is partially or wholly
regulated by another law; or
15.2.
That the
application of the provisions of the Act will cause that person or
clients of that person financial or other hardship or
prejudice; and
15.3.
The granting
of the exemption will not conflict with the public interest,
prejudice the interest of client and frustrate the achievement
of the
object of the Act.
16.
Neither
the application that served before the FSCA nor the one before us
traverses the jurisdictional factors referred to above,
apart from
financial
hardship
to the applicant aspect,
[9]
despite the applicant having been afforded the opportunity to do so.
17.
The
application that served before the FSCA simply made out no case for
relief under the statutory provisions referred to above.
18.
The FSCA urged
upon us to summarily dismiss this application in terms of section
234(4) inasmuch as it contends it is frivolous,
vexatious or trivial.
That section confers such statutory authority upon this Tribunal.
19.
It
is well established that although our Courts have inherent power to
prevent the abuse of its process in the form of frivolous
or
vexatious litigation
[10]
this
power is one which must be exercised with great caution, and only in
a clear case because Courts of law are open to all, and
it is only in
very exceptional circumstances that the doors will be closed upon
anyone who desires to prosecute an action.
20.
The
word
"vexatious"
in
its legal sense means
"frivolous,
improperly instituted without sufficient ground, to serve solely
as
an
annoyance to the defendant''.
[11]
21.
It
has been held that vexatious proceedings would also no doubt include
proceedings which, although properly instituted, are continued
with
the sole purpose of causing annoyance to the defendant;
"abuse"
connotes
a mis-use, an improper use, a use mala fide
[12]
,
a use for an ulterior motive.
[13]
22.
The
Constitutional Court in
Lawyers
for Human Rights v Minister in The Presidency and Others
[14]
held
in this regard as follows:
'What
is
vexatious?
In
Bisset
the
court
said
this
was
that
was frivolous,
improper,
instituted
without
sufficient
g
round
.
to
serve
solely
as
an
annoyance
to
the
defendant
.
..
(a)nd
...
frivolous
complaint[.] That
is
one with no
serious purpose or value.
Vexatious
litigation
is
initiated
without
probable
cause
by one who
is
not acting
in good faith and
is
doing
so
for the
purpose of annoying or embarrassing an opponent. Legal action that
is
not likely
to lead to any procedural result
is
vexatious."
[emphasis
added]
23.
Although
the application has been instituted
"without
sufficient ground"
as
it did not address some jurisdictional factors dealt with above
despite the invitation by the FSCA, one cannot find any factual
basis
to conclude that the failure to bring the application within the four
corners of section 44 of the Act was accompanied by
the intention to
cause annoyance to the counter-party.
[15]
24.
The fact of
the matter is that the application falls to be dismissed for failure
to make out a proper case for relief.
It is,
accordingly, not necessary to decide whether this is a proper case
for the invocation
of the
provisions of section 234(4) of the Act.
25.
The applicant
was invited to make submission on the jurisdictional factors referred
to above by the FSCA and woefully failed so
to do. When the second
opportunity presented itself in the form of the application for the
reconsideration of the impugned decision,
armed with the full reasons
thereof he, yet again, elected not to deal therewith.
26.
In the
circumstances, the application falls properly to be dismissed.
27.
In regard to
the question of costs, the FSR Act provides
that an
applicant
such
as the one before us may be mulcted with costs only under exceptional
circumstances. I do not consider this case to be such
a one. It is,
indeed, so that no proper case has been made out on the papers,
however and as stated above, I do not consider
that the
applicant sought to annoy the counterparty.
Further, the
parties were not legally represented, and, therefore the issue of
costs does not arise.
28.
Accordingly,
no order as to costs is made.
29.
The following
order is made:
29.1.
This
application is dismissed.
LG
NKOSI-THOMAS SC
CHAIRPERSON
SANDTON
17
JANUARY 2020