The first and second appellants, Ms Ilse Becker and Mr Eugene Becker, are directors of the third appellant, Fusion Guarantees (Pty) Ltd, a company offering guarantees and sureties. The Financial Services Conduct Authority (the Authority), established under s 56 of the Financial Sector Regulation Act 9 of 2017 (the Act), conducted an investigation into Fusion's affairs pursuant to s 80 of the Financial Institutions Act 80 of 1998. An inspection report dated 16 July 2019 concluded that Fusion contravened the Short-Term Insurance Act 53 of 1998. On 12 February 2020, the Authority gave notice to Fusion and the Beckers of its intention to impose an administrative penalty of R200 million on Fusion and make a 15-year debarment order against the Beckers. The notice afforded them an opportunity to make submissions. They made detailed submissions and applied to the Gauteng Division of the High Court, Pretoria, to declare ss 154, 167, 230 and 231 of the Act unconstitutional. The challenge to s 230 was not persisted with. The high court dismissed the application. Fusion and the Beckers appealed to the Supreme Court of Appeal with leave. During the litigation, the Authority did not take a final decision on the penalties or debarment.
The appeal was dismissed with costs, including costs of two counsel where employed.
Sections 154 and 167 of the Financial Sector Regulation Act 9 of 2017, properly interpreted, require the Financial Services Conduct Authority to invite and consider submissions from affected persons on all matters relevant to proposed regulatory action, including the threshold question of whether a contravention of a financial sector law has occurred. The phrase 'on the matter' in s 154(1) and 'relevant to the matter' in s 167(2)(a)(iii) necessarily encompasses submissions on whether a contravention occurred, as this is the jurisdictional predicate for any sanction. Even if the provisions could be read otherwise, s 91 of the Act makes PAJA applicable to administrative action by the Authority, thereby imposing obligations of procedural fairness. Applying the principle of constitutional subsidiarity from Zondi, statutes must be read with PAJA before being found inconsistent with s 33 of the Constitution. When so read, the Act contains no constitutional defect regarding procedural fairness.
The Court observed that it would be a 'perverse incongruity' if the Authority were required to provide reasons engaging the issue of contravention but could exclude from submission and consideration what might be said by a person as to why no contravention took place or that the contravention is of a lesser kind or degree. The Court noted that when the Authority comes to consider whether to make a debarment order, it cannot have made a final decision as to whether there was a contravention of a financial sector law - it may have concluded there is prima facie evidence of contravention, but any final decision must await submissions and their consideration. The Court indicated that if the procedural fairness challenge failed, the appellants did not pursue their s 34 challenge based on the Authority not being an independent tribunal, and therefore the Court said nothing further on that issue.
This case is significant for clarifying the application of procedural fairness requirements under s 33 of the Constitution to regulatory decision-making in the financial services sector. It confirms that the principle of constitutional subsidiarity requires statutes to be read with PAJA before being found unconstitutional for procedural fairness violations. The judgment provides important guidance on interpreting financial sector regulatory provisions, particularly ss 154 and 167 of the Financial Sector Regulation Act 9 of 2017, establishing that the right to make submissions extends to all aspects of regulatory decisions, including jurisdictional predicates such as contraventions of financial sector laws. The case reinforces that procedural fairness cannot be compartmentalized but must extend to all material aspects of administrative decision-making, including threshold factual and legal determinations upon which regulatory sanctions depend.