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FAIS Act FAIS Act and Subordinate Legislation
A top-performing representative resigns to join a competitor. Her FSP is angry that she is taking clients with her and debars her, citing 'breach of her restraint of trade'. She has no record of dishonesty or non-compliance. Which statement is correct?
RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.
- a) The debarment is proper, because an FSP may debar a representative for any breach of the employment contract.
- b) The debarment is proper, provided the FSP notifies the Authority of it within five days.
- c) The debarment is improper only because she had already resigned before the FSP made its decision.
- d) The debarment is improper, because a contractual dispute is not a ground for debarment.Correct
Why this is the answer
Debarment is a regulatory measure to protect the public. Its only grounds are that the person no longer complies with the fit and proper requirements, or has contravened or failed to comply with the Act in a material manner. A contractual or commercial dispute is not a ground, and she may apply to the Financial Services Tribunal to have the decision reconsidered.
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