Moonstone: Orange Insurance and the FAIS Ombud

Readers of my generation (and others with good taste in music) may recall the white album produced by The Beatles. This album contained a song called the continuing saga of Bungalow Bill.

A visit to the FAIS Ombud’s website reminded me of this particular song.

It is not every FSP who gets its own heading under the Determinations button on the Ombud website, but I reckon if you have 52 determinations against you, with another one pending, you deserve some kind of recognition.

In essence the problems arose as a result of a dispute between Orange as the insurer and Fleetsure, the FSP. This disagreement led to client claims not being paid, which inevitably led to clients complaining to the Ombud.

On 30 September 2010 the regulator requested clients via a press release to contact them before the end of October about claims problems.

It does seem odd that no finality is reached in this situation. Although I did not read all 53 determinations, the last few are virtually a repetition of the same facts, with the respondent, Orange, providing the same defence and then being ordered to pay.

I made enquiries to the FSB about the way forward in this matter, and was informed as follows:

The Registrar of Short-term Insurance directed Orange Insurance Limited (“Orange”) to settle all outstanding liabilities in terms of collateral refunds and valid claims under the Fusion book and Fleetsure book, respectively. Orange appealed the directives. The matter is now in the hands of the FSB’s Appeal Board. A date for the appeal hearing has yet to be set. We are in on-going contact with the secretariat of the Appeal Board to request that the matter be set down as a matter of urgency.

We will keep readers posted on any new developments.

· Immediately inform clients and product suppliers of the withdrawal of their licences;

· Return all uninvested funds received from clients without delay;

· Where they are holding proof of investment which belongs to clients, it must be fully accounted for and returned to their rightful owners;

· Where appropriate outstanding business must be transferred to another financial services provider in the best interest of clients;

· The Registrar must be kept informed of progress with the unwinding process and in the case of doubt, his instructions must be sought.

· Investors in the ill-fated Specialist Income Portfolio, who had their investment converted into shares into preference shares, are to be regarded as investors in Dynamic Wealth Management.

· The approved auditors of the two entities must, at the cost of the companies, oversee the above process and report progress, and problems or delays to the Registrar.

The FSB advises individual investors who require legal assistance to consult their advisers or seek redress through the office of the FAIS Ombud.

“The FSB is not equipped to assist with individual civil claims against financial institutions or former institutions.

“Apart from supervising the winding down of Dynamic Wealth’s remaining business, the FSB will continue to pursue appropriate regulatory action having regard to the disastrous consequences and losses caused to investors.”