FAIS Ombud denies leave to appeal
On Friday, 9 May 2008, the FAIS Ombud circulated a press release in which its decisions on two applications for leave to appeal were made public. In each of the cases the application was denied.
Earlier this year FAnews Online carried reports on one of the Ombud’s original rulings. In the case of Penzhorn versus Point Broker Services the FAIS Ombud ruled for the complainant, Elizabeth Penzhorn. The broker was ordered to refund her an amount of R22 344.00 in respect of commissions not ‘properly’ disclosed to her. The Ombud felt that the respondent had not taken proper care in communicating the amount of commission that would be taken on certain investment products. The respondent subsequently applied for leave to appeal the ruling.
In the second case the complainant applied for leave to appeal. The complainant (Mrs Osman) was unhappy with the original resolution of her claim against Noord-Wes Makelaars. Osman’s insurance claim on a BMW was repudiated due to non-payment of premium – a decision upheld by the Ombud.
Penzhorn versus Point Broker Services
Point broker services raised a number of issues with the FAIS Ombud’s original determination. Among these he felt that “the determination was flawed from a legal and factual point of view in that the word ‘nominal’ as used throughout and ultimately used in passing judgment by way of a penalty” was flawed. For those who have not read the original ruling the facts of the case were that the broker had advised his client that commissions would be nominal when they were in fact close to the maximum allowed… Sections on the application form relating to commissions had not been completed when Penzhorn signed the forms.
In his application for leave to appeal the broker claims that he “never used the word ‘nominal’” but rather the word “normal” in describing what fees would be charged. The FAIS Ombud determined it was strange for the respondent to so alter his position after not having done so in any previous responses or communications. Furthermore the Ombud noted that the word ‘normal’ was as useful as the word ‘nominal’ in disclosing costs and would not influence his finding. He also raised concerns that the respondent once again admitted to allowing his client to sign partially completed forms. The “respondent appears not to appreciate the serious nature of its conduct in requiring complainant to sign partially completed forms,” he said.
Osman versus Noord-Wes Makelaars
The Osman case centres on a BMW which was removed from Khayroon Osman’s insurance and replaced with an Audi. It was found that the complainant’s son, Mohamed Osman, instructed the broker to make this change on 7 February 2008. When the BMW was subsequently involved in an accident, the complainant (Khayroon) telephoned the broker and tried to reverse the earlier ‘swap’, claiming her son had no authority to make the change on her insurance policy. The main grounds for her appeal were stated as follows:
- The broker did not get instructions from her son to cancel the insurance cover on the BMW.
- Her son, in any event, had no authority to act for her in cancelling the insurance cover on the BMW.
The FAIS Ombud remained unmoved. In considering the application he noted that the complainant’s son had represented her throughout and had even “signed the broker’s appointment note on here behalf.” There were some other items worth a mention. One was that the signature on the complaint from was similar to the signature on the broker’s appointment note – and the other that the complainant supplied a police case number for the accident which she had not previously supplied despite numerous requests from the broker and broker’s attorneys. “The Ombud further held that there was no denial from complainant’s son that he did not give instructions to respondent to cancel the insurance cover on the BMW,” and these were enough grounds to refuse an appeal.
Altering the defence not welcome
A quick look at each of these cases reveals that the ‘aggrieved’ parties attempt to present different ‘defences’ in their arguments for permission to appeal. It seems the Ombud is unhappy with such strategies, preferring that the defence is properly constructed prior to the initial hearing. Unless there is a solid legal argument against the FAIS ruling or fresh and previously undiscovered evidence can be presented, the losing party had best accept the initial ruling.
Editor’s thoughts:
South Africa’s criminal justice system offers the opportunity to challenge court decisions up to the highest courts in the land – if you have the time and money! And regulators decisions can be challenged too. If you were on the ‘wrong’ side of a FAIS Ombud decision would you appeal as a matter of course, or accept the ruling and get back to business? Send your comments to [email protected], or add them below.
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