FAIS Ombud dismisses complaint against broker and find the broker acted on instruction

The FAIS Ombud has dismissed a complaint by a Potgietersrus woman after he found she had made an inept attempt to insure her car after it was involved in an accident so that she could file a claim.

Mrs Khayroon Osman had complained to Charles Pillai (pictured right), the Ombud for Financial Services Providers, that Peter Blignaut, a broker with Noord-Wes Makelaars, had without any authority instructed Santam to cancel the insurance cover for her BMW.

She alleged it was only when she lodged a claim for the damage to the BMW that she became aware that it was no longer insured and hence received no compensation from the insurer.

Complainant got two quotations for repair costs – one for R49247.17 and another for R42399.21. A Santam assessor estimated the damage at R20825.74.

Respondent denied Complainant’s allegations. He said he had acted on the specific instructions of the Complainant’s son, Mohammed Osman, who at all times acted on her behalf. He alleged Mohammed Osman had instructed him to cancel the insurance on the BMW.

Respondent was appointed as broker for the Complainant on 1 September 2004. During September 2004 the policy endorsement reflecting the placing of the BMW under insurance cover was sent to the Complainant.

On 1st November 2005, Mohammed Osman telephoned its offices and gave instructions to remove the BMW from the insurance policy and cover an Audi A3 instead.

Respondent telephonically confirmed these instructions with Mohammed Osman again on 3rd November 2005. Respondent provided proof of his phone calls to Mohammed Osman on that date.

According to Respondent, Mohammed Osman also furnished him with the engine number and VIN (vehicle identification number) of the Audi in one of their telephonic discussions. He also said he received the new policy schedule reflecting the changes on 25 November 2005 and posted it to the Complainant.

Respondent told the Ombud that on 9 December 2005 the Complainant herself instructed him to insure the BMW again. He said the Complainant told him that her son had not been authorised to remove the vehicle from the policy. She also told him not to take any further instructions from her son.

Respondent says when he approached Santam to carry out the instructions, he was told that the Complainant had already contacted Santam directly the day before to have the BMW covered again.

Respondent said the Complainant also told him that her son denied ever giving instructions for the BMW cover to be removed.

Respondent, seemingly suspicious by then, asked Complainant whether there was an accident or any other problem with the BMW.

He said: “She categorically denied any claim in existence on the 9 December 2005.”

Respondent said Complainant had alleged on 12 December 2005 that that she had told him on 9 December 2005 that the BMW was involved in an accident. This he categorically denied. He said he only became aware on 12 December 2005 that the BMW had already been involved in an accident on 29 November 2005.

In his ruling, the Ombud said: “The question that arises is why would Complainant phone the respondent on 9 December 2005 with instructions to cover the BMW again when, according to a computer print-out from Santam, she had herself requested Santam on 8 December 2005 to do so, knowing that it was already involved in an accident several days before.

“If, as Complainant alleges, she was not aware that the BMW was no longer insured until she filed a claim, why phone before filing the claim to have the car insured again?

“In my view the only inference that can be drawn is that it was an inept attempt to ensure there was insurance cover before filing a claim.

“The probabilities are that Complainant’s son had in fact instructed respondent to remove the insurance cover for the BMW and the complaint, therefore, falls to be dismissed,” the Ombud said.