A financial professional is debarred by a big company. A professor of finance and insurance deems the applicable legislation and its application unconstitutional. The insurer replies 'that is the law'. This is how small people are trampled.
In two separate, but linked cases, insurance giant Sanlam fired and then debarred an employee, Lemuel Melvill for misconduct and then cancelled his father, David Melvill's long-standing contract because David employed him as an administrator.
While ordinary investors may welcome the idea that the industry is working to protect them from exposure to unscrupulous brokers and conmen, what should be alarming is that it was not the regulator, or a court who took the action, but a company that has acted as judge, jury and executioner.
Robert Vivian, professor of Finance and Insurance at Wits University, is alarmed at this turn of events. In a lengthy comment on the matter, which was sent to Business Maverick, he argues that this outcome is what comes of badly drafted legislation, specifically the Financial Advisory and Intermediary Services (FAIS) Act of 2002, and that in the Melvill cases, Sanlam has interpreted the Act incorrectly.
The Act, Vivian says, was not passed with "the troubling practice of...