Moonstone : FAIS Ombud Settlements

For every determination by the Ombud, there were 41 settlements - in other words, the respondents pleaded “guilty” and accepted the recommendation for compensation by the Ombud.

These cases are not listed, or discussed, on the Ombud's website. Her annual report contained eight examples of such settlements which are published on our website. (See link below).

Complainant: Wiid

Issue: Failure to disclose the actual and potential financial implications, costs and consequences of the replacement product.

The complainant alleged that he was advised by his financial advisor to replace an existing investment at Insurer A with a similar investment offered by the respondent. The complainant alleged that the respondent's representative assured him that he would not pay any commission. After receiving his policy schedule for the new investment, the complainant noticed that commission had been collected from his investment. After numerous attempts to have the matter resolved the complainant turned to this office for assistance.

The matter was directed to the respondent who argued that the complainant had consented to the commission by signing both the quotation and the application form. This Office however directed the respondent's attention to its own documentation which reflected that the policy had been issued with a '100% allocation." This, in our view, appeared to have created the illusion that commission should not have been deducted, but rather that all the funds paid in by the complainant had been invested.

The respondent agreed to repay the commission, which came to R44 533, which was accepted by the complainant.

It is interesting to note that the product provider's marketing material was found to be the cause of the problem. It appears that, in this instance, it was also the product provider who repaid the commission. It is not clear whether this was reclaimed by them from the advisor.

Complainant: Meandes

Issue; Failure to render the financial service in accordance with the contractual relationship and reasonable requests or instructions of the client

The deceased purchased a vehicle at a dealership and had sought advice from an F&I Manager on the various insurance options available to him. During this meeting, the deceased accepted an Auto Settlement Policy. Due to his existing illness (diabetes), which was disclosed during application, the cover was restricted to death and retrenchment cover only. The deceased accepted this cover on these terms. The insurer thereafter sent a letter to the respondent requesting that the deceased sign a disclosure notice and acceptance declaration prior to inception of the policy. It is unclear whether this letter was ever brought to the attention of the deceased. Upon the deceased's death, the complainant, who is the insurer's son and executor of his estate, lodged a claim with the Insurer. The complainant maintains that the deceased was under the impression that the request for death and retrenchment cover had been granted as he had never been informed that such cover was not initiated and had clearly expressed his intention to take out the life policy.

The complainant approached our office for assistance after being unsuccessful in his endeavours to resolve the matter with the insurer. The respondents, in their response, alleged that they had contacted the deceased telephonically and had, during such conversation, received instructions that the deceased no longer wished to take out the credit life insurance with restricted benefits. The respondent could however not provide any documentation or record confirming the purported telephone call or any other communication with the insured regarding the policy.

Based on their inability to provide documentary evidence of their submissions, the respondent offered to pay R597 100.75 in settlement, which the complainant accepted.

Please click here to read all eight settlements listed in the annual report.