Inimical behavior to the efforts of law abiding FSPs
While some advisers continue to do good in their efforts to treating customers fairly and going above and beyond in achieving satisfactory client services, there are the few who continue to cause damage and create a bad effect on the efforts of others.
This was yet again, the issue in the recent determination by the Financial Advisory and Intermediary Services Ombudsman (FAIS Ombud). The case was between Coolmac First For Service (hereafter referred to as the complainant) and Anshe Kruger, an adult female and authorised Financial Services Provider (FSP) (hereafter referred to as the respondent).
The complainant had lodged a claim following the theft of tools from his vehicle. The insurer had initially refused the claim on the basis that the theft was not accompanied by a visible force of entry into or out of the building where the vehicle was parked, which was a pre-requisite in terms of the policy wording. The insurer subsequently cited the failure to specify the items as their reason for rejecting the claim. The items had to be specified within the ‘All Risk’ section of the policy for a claim to be valid. Essentially, the complainant accused the respondent of failing to advise him, the result of which led to the complainant's claim being rejected by his insurer.
Shortcomings in sight
On 17 November 2011 the complainant emailed a gentleman by the name of Hennie Jacobs an employee of the insurer at the time, seeking his help. Following this, several emails were exchanged between Jacobs and the respondent.
The respondent made it clear to Jacobs that she could not improve on the quote because, as she put it, 'This quote is from the insurer, therefore I cannot quote another one. The one quote from the insurer is not allowed to exceed the other.' The only way to work on the quote was to have the complainant sign a Broker Letter of Appointment.
Finally, the respondent, without having had any contact with the complainant, drew up a quote, which she later referred to Jacobs with a Broker Appointment Letter. The contract of insurance began on 1 December 2011.
The blame game
On 1 October 2012, the complainant went to work at one of his clients' premises and upon returning to their work premises and as they were about to offload their tools, the workers reported that the tools were missing and the canopy lock had been broken. The theft was reported to the South African Police Service (SAPS), and a claim lodged with the insurer. The insurer rejected the claim as set out above.
The complaint was referred to the respondent by the FAIS Ombud to resolve the issue and if the complaint was not resolved by 5 April 2013, she had to revert to the Office with her full version of events.
As background, the respondent first adverted to a verbal business arrangement she had with Jacobs in terms of which Jacobs referred clients for short-term insurance to her. She paid Jacobs a certain percentage of commission for every business lead. Further in terms of the business arrangement, the respondent could not contact any of Jacobs' clients directly. All business had to be done via Jacobs, including collecting information.
She stated she had worked on the basis that the quote forwarded to her by Jacobs was correct and in accordance with the complainant's requirements. However, sometime during 2012 Jacobs resigned and her arrangement with him was cancelled. The relevance of this detail is that the respondent was now at liberty to contact those clients who were referred to her by Jacobs.
On 6 August 2012, the complainant contacted the respondent's office to change the name of the company and bank details. The respondent once again highlighted that the complainant had not informed her that his tools were not insured. On 18 October 2012 the complainant called and reported the theft of the tools.
As a final point, the respondent expressed her disquiet regarding the claim by asking, ‘Why it took eight days after the theft to report such an important case to the police? Where are the invoices and proof of the repairs done to the lock of the canopy? The respondent said the complainant neglected to study the policy and now wants to put the blame on her.
Dire consequences
It must be pointed out that the respondent made no attempt to gather appropriate and available information regarding her client's financial situation and objectives to enable her to provide the client with appropriate advice. Without further enquiry, the respondent relied on the quotation that was emailed by Jacobs and at no stage did the respondent contact the complainant. The respondent promptly tied the complainant to a contract with the insurer without concerning herself with the consequences of such unconscionable conduct.
The respondent did not advise the complainant that the tools had to be listed in the All Risk section of the policy in order to be properly covered. She claimed she had informed Jacobs that if the client wanted to specify the tools, he should have supplied her office with a list and proof of purchase.
The complainant's address was incorrect from the start and only corrected eight months after the contract was concluded with the insurer. Even then, fortune was on the complainant's side, because he made the call that led to the correction.
The client's interests had clearly taken the backseat as the respondent had her own in mind. This makes a mockery of the FAIS Act and undermines the integrity of the financial services industry. The undisputed fact is that the respondent made no attempt to contact the complainant to ascertain his instructions. She chose to act in line with her business arrangement with Jacobs than in the interests of her client. The respondent's conduct was the cause of complainant's loss.
In an attempt to escape liability, the respondent cited her arrangement with Jacobs as the reason she could not access the complainant. None of these excuses will assist the respondent after electing to jettison the Code.
The complainant could only prove R17 756 worth of damage. Therefore, the complaint is upheld and the respondent is ordered to pay the complainant the amount of R17 756.
Editor’s Thoughts:
Without following the right protocols every action has a consequence, and you have to wonder what the respondent in this case was trying to achieve. It is obvious that the client’s best interest was not on the respondent’s agenda, which in itself is worrying because a client relies on the expertise and trust of a broker. However, it is pointless to say that one man’s doing will destroy the efforts of others because one bad apple, as mentioned time and time again, does not spoil the bunch.Do you agree? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected]
