Cross your T’s and dot your I’s
In a recent determination by the Financial Advisory and Intermediary Services Ombudsman (FAIS Ombud), the complaint arises out of the rejection of the complainant’s claim for a stolen motor vehicle.
Some determinations just make the mind boggle – and this one in particular stands out. We summarised the determination for you but you can download the original determination here.
The parties involved
Zakhele Buthelezi, the complainant, Insurance had initially been intermediated by Estene Brokers. During October 2012, Pro-Brokers (the first respondent) acquired the business book of Estene and the latter went out of business. Louis Kempen (the second respondent) advised Buthelezi that his portfolio had been moved to Pro-Brokers.
Hereafter the respondents will collectively be referred to as the respondent. The initial insurer was SaXum, followed by Regent and ending with Santam.
A possible mishap
During June 2011, Buthelezi purchased a Golf VI from a dealership in Secunda. He visited Estene Brokers’ offices in Secunda in order to secure insurance for the vehicle. Buthelezi claims he was guided as to the areas he should complete in the proposal form. Following acceptance of Buthelezi’s proposal, the insurance contract came into existence on or about June 2011.
During March 2013, the vehicle was stolen at gun point in Morningside, Durban. Buthelezi’s insurer, Santam, rejected the claim on the basis that Buthelezi had violated a term of contract, which required the vehicle be fitted with a tracking device.
A wake up call
In his complaint, Buthelezi claims and has consistently maintained that there was never any mention of a tracking device when he interacted with Estene. He denies that information was sought from him and maintains that the first time he heard of the requirement was when Santam rejected his claim.
Following the rejection, Buthelezi sought and obtained amongst others, copies of the insurance schedule, proposal form, Client Mandate, Letter of Engagement, and the Record of Advice from the respondents.
Upon examining the proposal form, he immediately noticed that the page dealing with the tracking device had been completed with the word Netstar. According to the determination, Buthelezi stated that he thought it appeared that the blank spaces in the proposal form were filled in afterwards by someone who uses the Afrikaans language, without consulting him and without his consent.
Buthelezi, moving from the premise that Santam had made a mistake, wrote to Santam contesting their decision. Buthelezi argued that he had never been advised about the need for a tracking device at any stage. He pointed out, amongst other things, to the different handwritings in the relevant page of the proposal form. Santam nevertheless rejected Buthelezi’s assertions.
On 5 February 2014, after an unsuccessful appeal to Santam’s Internal Arbitrator and a failed complaint to the Ombudsman for Short-Term Insurance, (OSTI), Buthelezi lodged a complaint at the FAIS Ombud against his broker.
Brokers input
The respondents, for their part, do not dispute that the remainder of the form had been completed by an employee of Estene who later became an employee of Pro-Brokers, following the takeover of Estene’s business. However, Pro-Brokers claim that the information had been obtained during a telephonic discussion between their employee and Buthelezi. The FAIS Ombud stated that the respondents “have failed to furnish anything substantiating their claim about the record of the stated telephone conversation”. This once again shows brokers the importance of keeping voice recordings.
The respondent states that Buthelezi had received instructions, notes or correspondence and that it is his responsibility to see that he comply with the rules and regulations of his policy at all times. The respondent concluded that it was stipulated in ten places that Buthelezi check his schedule to make sure that everything is correct. He said had Buthelezi checked, he would have noted that the policy pointed to a need for a tracking device. A lesson can be learnt – obtain proof of the tracking device and keep it on file.
The Ombud stated that based on the versions of both parties’ comments, she can safely say that when rendering financial services to Buthelezi, the broker had accepted a sparsely completed proposal form. According to the FAIS Ombud, almost half the page dealing with the tracking device was left blank. The Ombud further stated that, “the respondents invented the story about the telephone call” that was made by the employee to obtain the balance of the information.
As the proposal stated that the vehicle had a tracking device fitted by the initial insurer, SaXum, accepted the risk. In actual fact at the time of going on risk Buthelezi had not yet taken delivery of the vehicle.
Drawing the line
According to the Ombud, it would appear that the incorrect information was submitted in June 2011 to Saxum, and then onto Regent following a re-broke, and then onto Santam following a further re-broke.
In determining the matter, the Ombud states that apart from demonstrating ignorance and failure to distinguish advice records from policy documents, nothing in this statement demonstrates that Buthelezi was advised of the tracking device. In reality, Buthelezi drove the car for almost three years without a tracking device, due to the respondent’s failure to advise him of the requirement, the Office said.
One cannot help but wonder what was given to Buthelezi on renewal and at times when the policy was re-broked. As previously stated, Pro-Brokers felt that it was Buthelezi’s responsibility to comply with the rules and regulations so we assume that they must have pointed out that the vehicle should be fitted with a tracking device. Where does one draw the line between the broker’s duty and the client’s responsibility?
According to the determination Pro-Brokers blame Buthelezi for partially completing the form. The Ombud says the respondents (Pro-Brokers) failed to recognise their unlawful conduct of obtaining Buthelezi’s signature on blank forms and they do not explain the reasons for accepting a signed blank form from Buthelezi.
The Ombud ruled in favour of Buthelezi and ordered the brokerage to pay the amount of R317 500.
Editor’s Thoughts
A comedy of errors – I think not – rather a stark reminder to cross your T’s and dot your I’s. Rule no 1 – don’t ever complete a proposal form for a client and don’t fill in missing information yourself. Rule no 2 – In some cases, terms and conditions change when re-broking happens– tread with caution. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected]
Comments
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We clearly have to record an annual interaction with the client to ensure that they have reviewed the renewal schedule and want or do not want to make any changes. Report Abuse