A lie that’s half-truth is the darkest of all lies

17 April 2018Myra Knoesen
Myra Knoesen

Myra Knoesen

While others continue to do good in their efforts to treating customers fairly and going above and beyond in achieving satisfactory client services, there are the few who continue to cause damage or create a bad effect on the efforts of others.

This was yet again, the issue in the recent determination by the Financial Advisory and Intermediary Services Ombudsman (FAIS Ombud).

A payment sought after

The complainant, Mrs Martha Bitterbos, with the assistance of the respondent, Miriam Maketlo, an adult female sole proprietor who trades under the name and style Jo-Meri Funeral Services, concluded an agreement with KGA Life, a registered insurer and authorised financial services provider.

The terms of the agreement, which incepted in February 2013, entailed in brief the provision of funeral cover against an agreed monthly premium.

One of the lives covered in terms of the policy was Mrs Bitterbos’s aunt, who was unemployed and wholly dependent on Mrs Bitterbos.

After the premiums had been paid as agreed, Mrs Bitterbos’s aunt passed away in April 2015. Mrs Bitterbos’s claim for the payment of the agreed benefit of R10 000 was ignored by Maketlo, causing Mrs Bitterbos to fund the funeral expenses out of her own pocket.

Maketlo, according to Mrs Bitterbos, made an undertaking to pay the claim but failed. The reason advanced by Maketlo was that they were awaiting the completion of an investigation into the legality of their business by the Financial Services Board (FSB).

Having not heard from Maketlo regarding the payment, Mrs Bitterbos turned to the Office for assistance in November 2015.

In her complaint, she sought relief in the amount of R10 000, being the benefit promised in terms of the contract. She provided proof of payment of the premiums that had spanned a period of 22 months as at the date of the aunt’s demise. She claimed at the time that she was still paying premiums towards the same policy.

An investigation into the matter

On 15 February 2016 Mrs Bitterbos was referred to Maketlo for resolution with her client in terms of the rules. As Maketlo did not resolve the complaint with the Mrs Bitterbos, a notice in terms of section 27 (4) of the FAIS Act was issued to Maketlo. This notice was ignored.

As a result of several enquiries, the Office established on 7 March 2017 from KGA Life that the agreement between it and Jo-Meri Funerals had been cancelled on 1 December 2014, following Maketlo’s failure to pay the agreed premiums. KGA Life provided the Office with a letter dated 1 November 2014 in which it informed Maketlo of its intention to cancel the agreement effective 1 December 2014. In the event Maketlo failed to pay the premiums for the months of October and November 2014. KGA Life further advised that all their attempts to contact Maketlo were unsuccessful.

There is no evidence, according to the Office, that Maketlo had any other underwriter involved in her business, notwithstanding the continued collection of premiums from her clients. To date, Mrs Bitterbos has not been paid the promised benefit.

The FAIS Ombud’s recommendation

Having regard to the circumstances set out in the preceding paragraphs and no contention from Maketlo, the Office accepted the validity of Mrs Bitterbos’s claim against Maketlo.

The FAIS Ombud recommended that Maketlo pays Mrs Bitterbos the amount of R10 000 within ten working days from the date of the recommendation - 2 November 2017.

The Office’s final word

Failure to respond to this recommendation would result in a final determination being made against the respondents.

Maketlo did not respond to the recommendation and the regulator’s records confirm that the respondent has never been registered as a financial services provider.

Based on the information provided in the recommendation, Maketlo, according to the FAIS Ombud, is liable to pay Mrs Bitterbos’s claim.

Editor’s Thoughts:
We need to be honest and admit that the actions of the respondent, in this situation, were a major contributor of this determination handed down by the FAIS Ombud and rightfully so. Do you agree? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts

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