• 22 October 2020

Make sure you have a fair debarment process

It’s tough being a Finance and Insurance Manager (F&I Manager) in post-lockdown South Africa.

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Aside from the normal administrative burden, the pressure on making sales targets can place an F&I Manager in a tough position and entice him or her to skirt the normal due process or even accept a glaringly fraudulent application.

Wynand Strydom of Stryde Consulting, a HR and legal consultancy with a specialist automotive team, says that they have seen a rise in the number of disciplinary cases at dealership level against F&Is, with the claim levelled against them that they are not “fit and proper”.

This term originates from the Financial Advisory and Intermediary Services Act 37 of 2002 (FAIS Act) and is often seen as a “catch all” claim, that allows the Dealer Principal or group to simply fire or, more seriously, debar an F&I manager by claiming that they are not fit and proper to do their job.

“Contrary to popular belief, the requirements for a fair debarment process does not begin and end with adherence to the FAIS Act,” says Strydom. “While it is common cause that the FAIS Act stipulates the requisite requirements in order to comply with the “Fit & Proper” requirement, this requirements would at best only amount to evidence in a disciplinary process and not just cause for dismissal.”

Strydom says that in order for the process to be considered fair, and the finding for or against the F&I Manager as binding, the DP or HR Manager should consider the fundamental right to fair labour practices as enshrined in Section 27 of the Constitution.

In other words, the accusations have to be clear and, even before that the expectations on the F&I Manager had to have been well communicated and considered fair.

“If you study the FAIS Act, the term ‘fit and proper’ refer to the person’s conduct and his or her capacity to actually do the work assigned to them.

“But you can also have the same hearing and table more conduct-based findings, such as that the person did not act with honesty or integrity,” says Wynand.

Whatever the accusation may be that is levelled against the F&I, Wynand says that the employer or Financial Service Provider (FSP) should take “extreme care” when determining which process to initiate in a conduct hearing.

Wynand Strydom of Stryde Consulting.

“While the outcome for misconduct or incapacity might be exactly the same – meaning firing or disbarment of the F&I Manager – the Code of Good Practices in the Labour Relations Act prescribes completely different processes to deal with them.

"When following the prescripts of the afore mentioned codes, it should be evident that a debarment for misconduct would effectively amount to a sanction, or part of a sanction, resulting from the disciplinary process."

If you however decide to debar an F&I or group F&I Manager because of incapacity, the act and due process requires you to have followed additional steps to assist the person in becoming competent or in understanding the needs of their position. Failure to follow these steps, and simply moving to debar the person as in a normal finding of misconduct, could lead to an “extremely costly and embarrassing mistake for the DP or group.”

“Because of the risk of additional costs and embarrassment, it is advisable for FSPs or employers to consult with a labour specialist when acting against an F&I or F&I manager,” says Wynand.