Determination: Fighting a losing battle

11 May 2017Myra Knoesen

In a recent determination by the Financial Advisory and Intermediary Services Ombudsman (FAIS Ombud), the complainant sought an order compelling the respondent to refund him for the repair costs incurred for his vehicle, as well as refund of premium.

We summarised the determination for you but you can download the original determination here.

Transcript of events 

The following are the material aspects of the complaint: 

During May 2011, Mr Aarvarn Rajcoomar, the complainant, was introduced to Model Insurance by a colleague. He was interested in insuring his vehicle, a 2005 Toyota Run X. 

On 9 May 2011, Rajcoomar received the policy wording, confirming that the vehicle was comprehensively covered for its market value, at a premium of R463 per month. He was noted as the regular driver. The monthly premium was duly paid. 

On 28 April 2012 Rajcoomar was involved in an accident. He duly submitted the claim to the respondent on 2 May 2012. In return, Pieter De Wet (the respondent), a sole proprietor who conducted short term insurance business under the name Model Insurance Company, on 8 May 2012, provided authorisation to Concorde Panel Beaters to proceed with the vehicle repairs. 

Rajcoomar indicates that an invoice dated 21 May 2012 in the amount of R28 152.56 was provided by the panel beater, following completion of the repairs. However, five months later, De Wet still had not made payment to the panel beater. 

Under threat from the panel beater that Rajcoomar’s vehicle would be sold, Rajcoomar had no other choice but to settle the outstanding amount. By then storage fees were also added to the amount due. He reached a settlement offer of R25 000 all inclusive with the panel beater. 

He seeks an order compelling De Wet to refund him for the repair costs incurred, as well as refund of premium. 

Soliciting views 

On 19 March 2015, a notice in terms of Regulation 7 (1) (a) of the Financial Services Ombud Schemes Regulations was sent to De Wet, requesting him to resolve the complaint with Rajcoomar, alternatively, furnish the Office with a detailed response. He failed to respond to this request. 

Subsequent thereto, the complaint was formally accepted for investigation in terms of Section 27 (4) of the FAIS Act. A notice dated 6 October 2015 was sent to

De Wet again, inviting him to respond to the matter. To date, no response has been received. 

Having received neither the requested response nor the supporting documentation the matter is determined on the basis of Rajcoomar’s version. From the history of matters determined by the Office on prior occasions, it is clear, according to the FAIS Ombud, that De Wet has no defence against the allegations made against him. 

Essence of the matter 

According to the FAIS Ombud, the complainant in this matter is one of a number of policyholders who lodged complaints with the Office following the respondent’s failure to honour valid claims submitted in respect of policies held by them. 

De Wet, according to the FAIS Ombud, misrepresented to the public that he was an authorised short term insurer and financial services provider. He collected premiums from members of the public, but had no financial means to honour claims as they arose. 

It emerged from enquiries with the Registrar of the Financial Services Board, that he had never been licensed in terms of section 7(1) of the FAIS Act to render financial services to the public. He had also never been registered to conduct business as a short term insurer as required by section 7 of the Short term Insurance Act (‘STIA’). 

Accordingly, during February 2012, the Registrar issued a warning requesting the public not to conduct business with Model Insurance. Despite this warning, De Wet continued to conduct unregistered insurance business. The Registrar reported De Wet to the Commercial Crime Branch of the South African Police Service and secured an interim interdict in the KwaZulu-Natal High Court to stop him from carrying out short term insurance business. 

In the premises the following order is made according to the FAIS Ombud; Rajcoomar was upheld and De Wet is ordered to pay to him the amount of R25 000. 

Editor’s Thoughts:
Model Insurance has made many headlines in the news. In an article published in 2013, it mentions that De Wet admitted he had a long list of payments to make, that people had to wait their turn, and he had a family to think about. He blamed the firm’s woes on false reports and a vendetta against the company on the internet saying he had lost “over 700 policies” as a result. In March 2012, the SA Motor Body Repairers Association sent an e-mail to members urging them not to release repaired vehicles authorised by Model Insurance until the company had made payment. This was as a result of complaints from the association’s members about non-payment of claims by the “insurance company”.

The FSB started receiving complaints as early as 2010 and yet De Wet was determined to carry on operating unlawfully even after the FSB engaged with him. One can understand the frustrations of the public who are eager to see justice served. The sad reality is that not everyone will get their money back from Model Insurance. Do you agree? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts

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