Does treating advisers fairly extent to the FAIS Ombud?

30 November 2011 | Compliance - Regulatory | FAIS Ombudsman | Gareth Stokes

This weekends’ Personal Finance led with a story titled Court action could stop Ombud from getting back your money. It was a pro-consumer piece that heaped scorn on a financial adviser and his professional indemnity insurer for their decision to challenge a FAIS Ombud determination in Court. The urgent interdict – lodged with the Pretoria High Court – seeks to prevent the FAIS Ombud from registering a recent determination as a civil judgement. Personal Finance editor Bruce Cameron reckons the application “threatens to undermine the very reason for the existence of the Ombud: to provide [consumers] with a cheap and quick way to obtain redress if [they] suffer loss because of bad advice.” But there is another side to the story. For how long can advisers allow the steamroller justice handed down by the Ombud to go unchallenged?

I invite you to obtain a copy of the 38-page determination handed down by the Ombud for Financial Services Providers in the matter of Elise Barnes (the complainant), D Risk Insurance CC (first respondent) and Deeb Raymond Risk (second respondent). The document is freely available at http://www.faisombud.co.za/. Read the ruling from beginning to end and then ask whether the FAIS Ombud has conducted an independent and impartial hearing, whether it has performed its function without fear, favour or prejudice – or whether the organisation is simply hell bent on compensating the consumer regardless of fact. I believe this matter is going to Court because the FAIS Ombud has failed in its mandate.

It begins with financial advice

This complaint is similar to most landing up at the Office of the FAIS Ombud. It deals with a financial loss suffered by a client due to failings in the financial advice process. On 2 December 2008 the complainant invested R1.4 million in the Sharemax scheme marketed as Zambezi Retail Park. She said that her decision to move capital out of her money market accounts and into the Sharemax investment was based on Deeb’s financial advice. Deeb allegedly told her that the interest rate she was receiving on her money market investment was likely to decline further (an accurate prediction). He also said that any capital invested in Sharemax – the only alternative investment presented for Barnes’ consideration – could be withdrawn after 12 months (clearly incorrect). In May 2009 Barnes made a second investment of R400 000 in the scheme marketed as The Villa after obtaining assurances from Deeb that the first investment would be available (paid out) by December 2009.

The events that ensue are familiar to brokers and clients entangled in the various Sharemax property syndications. During November 2009 the complainant asked Risk when she could expect the R1.4 million to be returned. He advised at the time that she might receive it by March or April of 2010. By September 2010, when interest payments on the investment ceased, the complainant decided she had lost the entire R1.8 million. Barnes lodged a complaint with the FAIS Ombud on 3 November 2010, summarised in her own words: “As a pensioner, I was persuaded to buy Sharemax shares by Deeb Risk. This is a high risk investment which was never disclosed to me. I am unable to sell my shares in Sharemax and redeem my capital – and no interest has been paid since 1 September 2010.”

Deciding the complaint

The relief sought by Barnes was the full amount of capital lost – namely R1.4 million in the Zambezi and R400 000 in The Villa. She was prepared to forego R600 000 of the Zambezi claim to bring the matter within the jurisdiction of the Office.

The FAIS Ombud determinations follow a rigid structure. The parties to the complaint are listed, background detail provided and the complaint clearly stated. The Ombud summarises the complaint in point 13 of the determination as follows: “In recommending the investments the respondent is alleged to have failed to properly advise the complainant, in that he failed to make material disclosures including risk and liquidity as required by the General Code of Conduct.” In addition Deeb failed to comply with the requirement that providers act in the client’s interest when rendering financial services. The adviser received a large commission for placing the complaint’s capital in a high risk investment.

With the basics out of the way the FAIS Ombud set about unpacking the respondent’s version of events. Deeb filed a comprehensive response titled “Response in the form of an application in terms of section 27 (3) (c) of the FAIS Act on 10 January 2011. He tackled the issue from two angles, namely the merits of the complaint and whether the Ombud was the appropriate forum through which to deal with it.

I’ll skip over most of this “defence” to focus on two arguments that may have swayed a Court of law. The Ombud notes: “Respondent states that when he assisted complainant to invest in the Villa and Zambezi, he was not aware of any questions regarding the solvency and the legality of the business model of the two schemes – it was only about August / September 2010 that he learnt [of concerns] through the public media.” I think it is time for the Courts to determine to what lengths an independent financial intermediary must go to satisfy the due diligence requirements outlined in the FAIS Act. Even an institution with massive resources (think of the Financial Services Board) takes months to thoroughly investigate questionable product providers.

An indeterminable quantum...

The second argument: “Respondent finally submits no decision can be made concerning negligence on the grounds alleged by the complainant, unless it is established whether or not the Sharemax model was legal, what the causes of non-payment of interest were and what was in the public domain when he discussed the investment with the complainant.” I’m not a legal expert, but it seems strange the FAIS Ombud can rule on the quantum of the complainant’s loss while there is still so much uncertainty around the Sharemax case. Don’t get me wrong. It would be dangerous to allow Sharemax to remain in limbo (under permanent restructure if you prefer) to prevent consumers from filing for damages. Likewise, no Court should award damages unless such damages can be accurately determined.

I think there are some other points which could be challenged in the Courts too. In determining its jurisdiction the FAIS Ombud observes: “All of the allegations made by the complainant are matters of compliance with the Code. These are matters that can and are answerable by records maintained by the financial services provider!” They basically state that the complainant’s “word” doesn’t have to be backed by evidence, but that the respondent must provide evidence to prove his / her innocence. The Ombud system affords greater protections to the accuser...

The advice was inappropriate, but...

Based on the determination there is little doubt Deeb’s advice was imperfect. But I’m more concerned with process and whether the FAIS Ombud lives up to the objectives stated in the opening paragraphs. The flimsiest of evidence leads to the following conclusion: “The respondent should have clearly seen the discord and not continue with the sale. He did not, because right from the start, he had intended to sell the complainant the Sharemax investment whether this was consistent with the circumstances or not.” The Ombud’s assertion (or should we say assumption) is probably 100% correct. But in the same vein we might say that the Ombud is glossing over certain obstacles in this case because it decided at the outset that the respondent was guilty!

Editor’s thoughts: The FAIS Act places a tremendous burden on the independent financial adviser. It seems crazy that a system requires each and every adviser to carry out due diligence on a financial product when a single FSB stamp of approval would suffice… Would the financial services industry be safer if the Financial Services Board investigated and approved new financial products before they came to market? Please add your comment below, or send it to [email protected]

Comments

Added by Zeus, 13 Dec 2011

The ombud makes some very valid points regarding the violations of the Code of Conduct. The advisor failed to do a proper needs analysis or follow a replacements process or to disclose commission that was received. Any one of these would have resulted in a ruling against the advisor. However, I am concerned about some of the messages in the determination: Why didn't the ombud highlight the education of the applicant so that we can determine whether the advice was appropriate. Frankly, if I was investing 1.4 million, I would read the 94 page document my advisor gave to me, twice. Secondly, the ruling places too much of an obligation on the advisor to understand the nitty gritty of the company selling the shares. I think that that is too onerous. I believe in the concept of treating cutomers fairly, but I also believe that there must be balance(clients must also use their grey matter). Third, I think the award should have only have been payable once the Sharemax case is finalised.
Report Abuse

Added by Devils advocate, 07 Dec 2011

Bottom line - advisors hold themselves out as being experts who are able to advise the public on which investments suit their financial needs. It is a shameful copout for an advisor to whine that it is too difficult for him to understand the products or investments that he "advises" a customer to purchase. If you don't understand the product or the risks, it is shameful bordering on criminal for you to advise a customer to buy it and accept commission as if you had actually added value in the process. In the end it is all about greed. Advisors want the lucrative commissions but they don't want the responsibility that comes with the reward.
Report Abuse

Added by Sunette, 06 Dec 2011

I am a financial service provider, and had a personal experiance with the Fais Ombud. I felt like getting a hiding from the Fais Ombud as my case was dismissed and did not even had the oppertunity to reach Mrs Bam. I wrote a letter to her (adviced by Gerry Anderson) from the Fsb. Had no reply yet after nearly a year. The Fais Act were ignored in this matter but because I am a independed broker I was supposed to know better. I can not see a future for the independed broker in South Africa and feel that the FSB and Ombuds are more these days for the direct insurer.
Report Abuse

Added by Confused, 03 Dec 2011

"Forensic investigator, Pierre Hough, claims that an offer of compromise to Sharemax creditors won’t resolve problems facing investors in the scheme. Sharemax’s application for permission from the High Court to reach an offer of compromise with creditors may be halted according to Chase International managing director Pierre Hough. He says the planned offer of compromise is trying to legalise an illegal act and is prejudicial to the rights of prospective investors. Hough, who is a business strategist and specialist forensic investigator, alleges that there were no investors or shareholders in either The Villa or Zambezi Retail Park because a condition that had to be met for the scheme to become effective had not been fulfilled. He says this condition was that the properties be transferred to the syndication vehicle and this condition had not been met. He says that in terms of the government notice on property syndications, the money deposited by prospective investors into the scheme had to be repaid to them Hough says that the government notice is clear: the money deposited must be repaid to the applicants and he claims, the issue of share certificates to prospective investors is “highly irregular” and “possibly fraudulent”.( From the internet) Question:The money which was invested in tthe property syndiaction scheme was paid into Sharemax's attorney's trust account. Why must the broker repay the funds invested to the client. Should Sharemax not refund the investor the money they took in as an "investment " which was paid according to the prospectus into the attorneys trust account now that all has come to a standstill. The Zambezi Mall was officially opened last year April 2010.They have tenants ,but it is stated that the buildingwork is not complete.It does not make sense.
Report Abuse

Added by Quinten Knox, 01 Dec 2011

(Impartiality?) - Your article reminded me of an article published quite a while ago at the Ombud's website (http://www.faisombud.co.za/news/ombud.htm). As far as I am able to establish the article has since been removed. Two quotes in particular are relevant with regard to impartiality. Quote: "“Bam says she is attracted to her regulatory and watchdog role as it helps the people on the street in their daily “David vs Goliath” battle against financial giants and fights harmful practice against consumers.” Quote: “She says there is “triumphant feeling” at the end of a case when a transgressing provider has to pay up and “admit to having “Bam cannot remember what drew her to the legal field. Triumphant feeling? Ms Bam is also quoted as saying that she cannot remember what drew her to the legal field.
Report Abuse

Added by Clayton, 01 Dec 2011

In most civil cases both of the parties concerned are represented by their respective attorneys or advocates, which attorneys and advocates believe they will win their clients cases. Do the losing parties attorneys and advocates have to pay for the loss suffered by the winning party, or does the losing party itself pay for the loss suffered. Are the losing parties attorney and advocate then struck off the Law Society's role because they lost a case for a party they were representing?
Report Abuse

Added by Ayanda, 01 Dec 2011

Before the EU outlawed it, the West German insurance regulator had a system in the 1960s and 1970s that required all new insurance and investment products to be approved by them before launch. Their approvals committee consisted of "experts", many of whom had naturally been or were associated with direct or indirect competitors. The results were summarised in a Swiss Re research report issued circa 1980: 1. It took between 12 and 36 months for new products to be 'approved' or rejected. 2. Committee members were afraid that as "experts" they would be called to account later and thus were VERY slow to approve anything new or innovative. 3. For this reason, the move away from traditional 'with-profits' life insurance to the more innovative'linked' life assurance was NEVER approved. 4. Dread disease and Terminal illness benefits (developed in SA's innovative market) were NEVER approved. (It was claimed that insufficient data was available to 'risk exposure to such new products' until more research had been done.) 5. The natural conflicts of interest and personal agendas of the "experts" on the approvals committee ensured slow processing and unreasonable caveats for the new products of those they felt biased against for undisclosed reasons. 6. Because they knew that they were going to be held responsible for potentially billions of present or future losses / claims, the regulator demanded massive protections from the insurers concerned, often making the launch of innovative new products impossible. 7. West Germany thus developed a reputation for the most expensive, least innovative products in Europe. (A reputation from which they have yet to recover!) 8. England, which at the time was not yet over burdened with their new FSA and its equally draconian provisions, became the beneficiary of West Germany's plight. Everyone bought their insurance from English insurers. Britain's 'invisible exports' soared into the stratosphere as a result. 9. The West German insurance industry shrank dramatically, calling into question the solvency of numerous companies that were then forced into mergers and take-overs. If SA were to introduce anything approaching an "Approvals committee" at the FSB, the cost of SA insurance and investment would sky rocket, products would fall behind international development, and lead to a similar contraction in the local industry as people (and insurers) move their purchases and companies off-shore to enjoy the fruits of a properly competetive environment. God protect us from 'know it all' regulators and other 'do-gooders'!
Report Abuse

Added by sharemaxinvestor, 01 Dec 2011

The legal minefields surrounding the collapse of property syndication company Sharemax Investments are growing. Sharemax’s attorneys, Weavind & Weavind, and Capicol, the developers of the Zambezi Retail Park and The Villa, have both launched independent defamation and damages cases. A criminal case has been lodged against Weavind & Weavind related to the alleged illegal release of Sharemax investor funds from its trust account before the transfer of properties to the syndication vehicles. A demand for repayment has been issued to Weavind & Weavind on behalf of 11 investors in terms of a section of the Companies Act that is normally a precursor to a liquidation application. Claims have been submitted to the fidelity fund of the Law Society of the Northern Provinces and Attorneys Insurance Indemnity Fund, both also related to the release of funds by Weavind & Weavind. Lurking behind the scenes is the finding by an investigation conducted for the registrar of banks that Sharemax’s funding model contravened the Banks Act. Surely at some stage someone is going to be prosecuted for this contravention” The new board of the Sharemax group of companies also plans to seek permission from the high court for an offer of compromise in terms of the Companies Act to creditors in schemes promoted and marketed by the company. However, it has been claimed that this planned offer was seeking to legalise an illegal act and was prejudicial to the rights of “prospective investors”. In fact, doubts have been expressed about whether the Zambezi Retail Park or The Villa schemes had any investors or shareholders because a suspensive condition had not been fulfilled: the transfer of the properties into the syndication vehicle mentioned in the prospectuses for both of these schemes. But can such a scheme of arrangement be applicable to investors and shareholders in the company or only creditors? In terms of a government notice on property syndications, the money deposited by prospective investors into the trust account of Weavind & Weavind must be repaid if the syndication does not proceed. Weavind & Weavind maintains the government prohibition on the release of investor funds for a property syndication prior to the transfer of the property is not applicable to the firm and various clauses in the prospectuses made it “abundantly clear” it was not the intention that investors funds would only be paid out of trust once the property had been transferred. However, the prospectuses also specifically state that investors funds will not be released from its trust account prior to the transfer of the property. What then gives Weavind & Weavind the right to ignore or disregard a mandatory government notice related to property syndications? The share and debenture certificates issued by Sharemax to prospective investors also specifically state that their “investment” would be deposited into Weavind & Weavind’s trust account and “kept there until the investment amount is processed and the property is transferred”. Finally, an arbitration last year concluded Sharemax must pay R64 million, excluding damages, to Capicol. This amount was due for payment by no later than March 7, but the Sharemax board has admitted it is unable to pay it. Does this not mean Sharemax is insolvent? If so, does the rescue plan being hatched by the new Sharemax board mean the company is still trading and the directors of the company could be held liable for reckless trading” It is obvious this saga, involving about 40 000 shareholders who have invested about R4.5 billion in property syndications promoted and marketed by Sharemax, will probably take years to resolve. ( News Report)
Report Abuse

Added by myview, 01 Dec 2011

If anything, we should support any consumer protectionism introduced by government, such as the Ombud is concerned. It is neglect of introduction and proper enforcement by government that have caused consumers repeatedly to find themselves in this situation. People and business, big and small are quick to take money from consumers for investments, etc. But when the cactus hits the fan then the consumers are looked upon as having leprocy. So much so they will even band together to fight the consumer. Just read the news.
Report Abuse

Added by jo, 30 Nov 2011

Good article. Some years ago research (forget by whom) found that the average Brokers earnings was in the vicinity of R30 000 per month. From that they had to pay for admin staff, office and other overheads, and this was before the full brunt of legislation came into force. Assurance broking is no longer a high income profession and hasn’t been for some time. This however, hasn’t stopped the media from bashing them or the Insurers from exploiting them. Good to read something fair.
Report Abuse

Added by Andre, 30 Nov 2011

The ruling is uncalled for since the only loss could be interest or income. The capital will be safeguarded in the next few weeks, with no option to loose it. Only disadvantage will be that clients will have to wait longer before their investments can be profitable realized. It is strange that the ombudsman did not consult with the appointed directors of the belated group to find out what the present status quo is?
Report Abuse

Added by Advisor, 30 Nov 2011

I will keep this short and sweet. Firstly to the advisors who sold the Sharemax scheme to clients - you deserve what you get as it was patently obvious that this was not the right thing to do for clients. You are the types that not only give this industry a bad name but also ensure poverty and misery for your poorly advised clients. Shame on you ! To the FSB - we advisors advisors fund you. Where are you to do the due diligence on the very companies you register ? What is your role in this whole scam ? I fail to understand how the FSB can happily register FSP's but then lay the blame at the brokers door when the FSP's turn out to be scams. Ethical Advisors must make an urgent stand against this totally unjust system which stacks all odds against us.
Report Abuse

Added by PJ, 30 Nov 2011

Personally I have always maintained (After discussion with a Senior Advocate) that the FAIS Act fails in its objective, as it is the sloppiest piece of legislation ever written. After you have read through the Act you have more questions as to what a Service Provider must do than before. It is my understanding that any Act is suppose to stipulate responsibilities and cannot be left for interpretation after the fact. Based on this it was strongly suggested that an action brought by all Service Providers might just prove the Act illegal until it stipulates exactly what is required of a Service Provider so that there is no uncertainty. Surely since we as SP must carry the burden of being liable for undefined responsibilities, only to surface after a complaint, our commission percentages should increase 3 fold so that we can pay for the PI Cover. Certainly the client whom is the protected party should pay for the benefit of an escape goat called the Service Provider based on the whims of the Ombudsman. How can the FSB continue allowing poor products to be sold on the market and then allow the SP to be blamed when something goes wrong. It goes without say that the FSB cannot plead ignorance of the Sharemax Investments as it was the hottest investment scheme being sold with huge billboards everywhere advertising the Investment. It seems that the FSB wants to control and be paid without accepting any responsibility for any lack or oversight on their part. It is after all their function to be the watchdog of the Industry. If the watchdog is not watching should they not carry some sort of liability? Case in point is the recent report released where the Direct Insurers percentage of repudiations is above 30% and Broker channeled Insurers repudiations is below 10%. My interpretation of the Act would suggest that there is something wrong and the FSB / FAIS Ombudsman should act and notify the public of these discrepancies by a chosen form of media. Surely this would have been in the public interest to protect the policyholder. Is the FSB not liable to keep the public informed of material facts where there is clearly public interest. Can I as a policyholder sue the FSB for their failure to protect me by not informing me through a chosen form of Media of their choice. If they make the laws are they not responsible to act within them and liable for their failure to do so?
Report Abuse

Added by Pete, 30 Nov 2011

Where was the FSB when Deon Basson blew the wistle on these syndications? Did they not fail the public by allowing millions of pensioner provision to go to fat cats and simply looking the other way? Asking the adviser to do a due dilligence is wrong. The FSB should have done it and only allowed investments into those that passed the due dilligence. The Ombud measures the advice given against the code of conduct. If that was not adhered to then the adviser is at fault. If the investment was a scam and was running under the FSB's nose who can blame the adviser or the investor for assuming things are kosher? Perhaps it is not the Ombud who should be questioned but the FSB itself.
Report Abuse

Added by Tim jones, 30 Nov 2011

How do we as Fsps undertake to do a proper due diligence exercise? Who of us are properly equipped to do so? Have any of us done due diligence on the traditional suppliers such as Old Mutual,etc.?How do we know that their products are sound? We clearly need some rating body to do this for us!
Report Abuse

Added by James, 30 Nov 2011

Yes agreed bad advice. But your point on due diligence by a FSP is something we simply cant do to the extent expected in this case. The category of licence the FSB issued to Sharemax and to future applicants needs far tighter legislation as well liquidity warnings to adviser's and clients. These investment funds/schemes are often put together by highly qualified people in law and accounting and placed in legal structures that protect the people applying for the licence. The problem with Sharemax was the huge flows of new money into a property boom so they kept buying bad quality properties over valued by Sharemax. Like all quality money managers Sharemax should have closed their fund should they have not been able to buy quality properties and that should be a FSB requirement for these type of licences!
Report Abuse

Added by Ayanda, 30 Nov 2011

The Cameron article is another cheap attempt to have industry members abandon their rights and due processes under the rule of law. This is by no means the first time he has done it. He regularly attempts the ad hominem attack, thinking that by printing the names of the CEO's of the companies he wishes to intimidate he will "embarras" them into giving up a just cause. I remember an occassion in about mid 2007 when he attached by name senior partners at Bowman Gilfillan for having the temerity to act as the lawyers for the defence of someone else under FSB attack, forgeting all about the accused's rights to a fair trial and to audi alterem partem! But Cameron discredited himself as a balanced journo long ago and no one takes him seriously any more. The real concern is with the 'all knowing' FSB which has quite suddenly gone off the rails accross the board. They seem to have it in their heads that the rule of law no longer applies to them and that they can ignore it and all legal precedent; that they can make new regulation (euphemistically called "subordinate legislation" by them) that exceeds the bounds of their authority, and now suffer what Heyek referred to as the 'fatal conceit' of actually believing that they know what is best for the industry and its clients. It is high time this ever-growing monster in Pretoria (now over 580 staff!) had its wings clipped.
Report Abuse

Added by miffed, 30 Nov 2011

The burning issue here to my mind is that Cameron (and clearly the FSB) view and now position the independent adviser as the final underwriter of practically any investment. The reality is that the burgeoning Code now places ridiculous administrative demands on the adviser where non-compliance with any aspect (whether material to the actual case or not) can be seen as grounds for a ruling against the adviser. Ask yourself why common law action for loss and damages is not pursued against the directors of Sharemax itself or the FSB for that matter for licensing them to do business and thereby expressly allowing client funds to be channelled into what looks like a black hole? Why – because of the lack of burden of proof and the ease with which a determination can be made by interest groups (FSB) that are hostile to the cause of the adviser. Bizarre that the FSB instead of promoting its members interest now seems an unstoppable juggernaut swelling its ranks with personnel for the express purpose of pursuing rather than assisting advisers to achieve compliance Some advisers here seek to attack the purveyors of Sharemax as getting their just desserts but they are missing the point. Rather they should be extremely wary of this emerging principle that the adviser should bear the physical losses where a client’s investment goes South notwithstanding the fact that they had no control over the investment, derived no benefit from the capital (save for usual fee or commission based compensation), did not actually embezzle or otherwise steal the money, could neither have influenced nor controlled the actions of management nor been privy to the inner workings of the day to day business. There are many investments (even main stream money markets) that purport to provide low risk returns but possess strange embedded instruments to provide returns but are nonetheless labelled as ‘safe’ – how would you feel if the FSB says that in terms of your due diligence you should have uncovered all the inner workings and assessed they were satisfactory and above board. Completely ludicrous. The FSB is clearly conducting a witch hunt in order to deflect blame away from their own considerable responsibility in the matter thereby furthering the media perception that financial advisers are by and large a bunch of charlatans.
Report Abuse

Added by Sharkie, 30 Nov 2011

I agree with Ayanda, the FSB is the controlling body of the financial industry in the country and they should focus on all new financial products that is launched for soundness. By the time the product is distributed to the adviser all due diligence should have been completed and all product providers should get the stamp of approval from the FSB!!!
Report Abuse

Added by Willie, 30 Nov 2011

Maybe someone can put me in contact with the real estate ombud. I want my "estate agent" from Wakefields to compensate me for the piece of land he sold me in a luxury golf estate that is now in the process of being liquidated. I will also contact Ernst & Young to do a independant due dilligence on Old Mutual, Sanlam, Discovery, Absa, Medihelp, the SA Government and the Treasury (for giving advice on SA Retail Bonds).
Report Abuse

Added by paul, 30 Nov 2011

To the Short & Sweet advisor. You are an a** you are soo ignorant you shouldn’t be in the industry. Have YOU done your due diligence on each fund you recommend? I.e. Alan Gray, Coronation, Cadiz etc. Where will you stand when the FSB asks you for the reason you placed clients into the above funds. These are FBS APPROVED funds. I’m assuming you are recommending them for that reason. Sorry for you if one of the fund managers trades his/her fund into liquidation. And don’t think it’s not possible. And you A**, you paint all the advisors with the same brush. The last time I saw that was during apartheid. I for one did due diligence on Sharemax. I drove to each and every centre; check the condition of the buildings that the tenants were there as disclosed on the prospectus, the location was good and that there was little possibility for over saturation (same supplier). I drove to their office and insisted on an interview with management. I attended their training courses. I even approached a forensic auditor to ask what the price would be to do an independent audit.( R 20 000 per syndication by the way. Way too expensive for me to afford.) I read articles on how all investment should have disclosures like Sharemax did in its prospectus. You may remember, oh sorry I forgot your an a** Sharemax sold the first half of their syndications AT A PROFFIT. Not only that, their investors never missed a payment which was more than I can say for my tenants in my investment flat who paid 9 out 12 months rent. I was so convinced that this was as good as the syndications that are common in the United States and Australia where unlisted property shares are as common as the kangaroo, I bought shares for myself. Not only that, I bought clients shares because they needed their funds desperately. Shares for Sharemax were traded readily when all was well with the economy. So you can see how greedy I was because I sold shares to myself. Guess I should take myself to the Ombud and complain I gave myself bad advice. Fortunately we did not sell shares in Zambezi as I felt this was different type of investment than buying existing established buildings. So those brokers out there that feel that Sharemax & PIC brokers should be taken out of the industry, you are looking the wrong way. We are not your opposition. It’s the companies who you sell for. They are looking to sell far more profitable off the shelf products and keep the billions they pay the broker for the business they place and have worked hard to sell and service. Yes sell. This is a selling game first and foremost then it become about delivery. Tell me you sit in your office waiting for the phone to ring. Your FPS’s (Financial Product Supplier) are looking to the new generation emerging that buy on the internet and who distrust the sales man. The FPS is willing to supply and is reddening the markets. Who do you really think runs the FSB. Just follow the money!
Report Abuse

Added by Alex, 30 Nov 2011

Makes absolute sense to me. I would hope that the FSB is more aware of weather the Old Mutual, Momentum and the likes, are able to eventually pay out the RAs and life covers that I am selling and it won't be me that will called on to do so one day.
Report Abuse

Added by Alan, 30 Nov 2011

In my opinion, the Ombud shows a poor appreciation of the law. A complaint is defined in the FAIS Act, 2002 as a specific complaint in which it is alleged that the provider has contravened or failed to comply with a provision of this Act and that as a result thereof the complainant has suffered or is likely to suffer financial prejudice or damage. It can also be a specific complaint in which it is alleged that the provider has wilfully or negligently rendered a financial service to the complainant which has caused prejudice or damage to the complainant or which is likely to result in such prejudice or damage. The point is, the Ombud must show that there is a direct link between the alleged failure to comply with the Act, the financial prejudice or damage suffered by the complainant. One of the questions she should have examined – but failed to do so – was what would have happened if the provider had observed all the disclosure requirements to the best of his ability? The Ombud should have asked this question and also should have examined exactly what the provider was purportedly obliged to disclose – in detail. Ms Bam seems ignorant of the fact that the “versari in re illicita” doctrine. This doctrine meant that a person who committed an unlawful act was liable for all the prohibited consequences which flowed from the original unlawful act. The absence of mens rea with regard to these (or some of these) consequences did not constitute a defence. This doctrine was applied on a number of occasions until 1965 when the Appellate Division in S v Van der Mescht and S v Bernardus swept away the last vestiges of the versari doctrine Furthermore, the damages have not been determined and so she is totally unable to make any determination at all. Cameron is a less than desirable journalist – he comes across as something of a bottom feeder and I have often wondered why some give him more credibility than most people think he deserves. May the appeal succeed and may the High Court pass judgement on the Ombud’s modus operandi once and for all. She needs to be slapped down.
Report Abuse

Does treating advisers fairly extent to the FAIS Ombud?

quick poll

Question

What can retirement funds do to improve client-adviser engagement during members’ employment years?

Answer

Advice at onboarding Annual adviser check-ins Meet-an-adviser workshops Offer advice at life-stage events

View the Results

Does treating advisers fairly extent to the FAIS Ombud?

Comments

Comment on this Post