Retrieves R60m for con­sumers

More than 10 000 com­plaints were re­solved, with short-term in­surance cases top­ping the list

Saturday Star - - P E R S O N A L F I N A N C E - Mar­


In Fe­bru­ary 2009, Mr J ap­plied for a long-term in­surance pol­icy, which pro­vided cover for life, dis­abil­ity and dread dis­ease, in the amounts of R500000, R200000 and R200000 re­spec­tively.

In 2015, Mr J was di­ag­nosed with early-stage prostate can­cer, which was de­tected be­fore it had be­gun to spread. He lodged a claim with his in­surer in terms of the dread dis­ease ben­e­fit on the pol­icy.

The claim was re­jected on the ba­sis that cover for very-earlystage prostate can­cer is specif­i­cally ex­cluded un­der the can­cer ben­e­fit.

Mr J was shocked to learn of this ex­clu­sion. He claimed that he had never been ad­vised of such an ex­clu­sion when the pol­icy was sold to him via tele­phone.

On re­fer­ral of the com­plaint to the in­surer, the in­surer pointed out that Mr J had been pro­vided with the full doc­u­ments per­tain­ing to his cover within 14 days of the call.

The om­bud wrote back to the in­surer, say­ing: “Based on the tele­sales record­ing sub­mit­ted to our of­fice, there is no ev­i­dence that it was in fact dis­cussed with the com­plainant that early-de­tected prostate can­cer would not be cov­ered un­der the pol­icy.” When the in­surer made no at­tempt to re­solve the com­plaint, the om­bud took the case un­der in­ves­ti­ga­tion.

The main case of the in­surer was that Mr J had been sent doc­u­ments that ad­e­quately ex­plained the scope of cover. It stated that it would be im­pos­si­ble for it to know for what con­di­tions a client may claim for and, there­fore, im­pos­si­ble to pro­vide spe­cific ex­pla­na­tions on those con­di­tions. “For that rea­son, clients are pro­vided with all rel­e­vant terms and con­di­tions to read care­fully and store in a safe place,” the in­surer ar­gued.

The om­bud rec­om­mended that the in­surer set­tle the com­plaint. It did so, pay­ing the full amount of the ben­e­fit: R200000.


The com­plainant, Mr S, was a 66-year-old re­tired quan­tity sur­veyor who had owned his own busi­ness. In July 2015, he met a rep­re­sen­ta­tive of a fi­nan­cial prod­uct provider and asked that his funds be moved into more cau­tious, lowre­turn in­vest­ments, specif­i­cally to avoid losses. He also asked that all costs be dis­closed.

The ad­viser rec­om­mended that the amount be split be­tween funds. He dis­closed his fees and

Mr S agreed to the trans­ac­tion.

Mr S sub­se­quently got a shock to see that R299958 had been de­ducted for cap­i­tal gains tax as a re­sult of the trans­ac­tion.

He com­plained that he had not been ad­vised of the tax im­pli­ca­tions of the trans­ac­tion and ar­gued that he would have never agreed to the trans­ac­tion had he known.

To meet the tax bill, Mr S had had to sell a prop­erty be­cause he could not af­ford to pay it from his re­tire­ment sav­ings. That dis­posal also at­tracted cap­i­tal gains tax.

Fol­low­ing in­ter­ven­tion by the om­bud, the fi­nan­cial in­sti­tu­tion made an of­fer to set­tle, which was ac­cepted by Mr S.


THE of­fice of the Om­bud for Fi­nan­cial Ser­vices Providers, bet­ter known as the fi­nan­cial ad­vice or Fais Om­bud, clawed back more than R60 mil­lion for con­sumers in its 2017/18 fi­nan­cial year, with short­term in­surance re­main­ing the most com­plained-about fi­nan­cial sec­tor.

The re­port, re­leased last week, shows that the of­fice re­ceived a to­tal of 10211 new com­plaints dur­ing the year, a slight re­duc­tion from the 10846 re­ceived dur­ing the 2016/2017 fi­nan­cial year.

It was the sec­ond con­sec­u­tive year that the of­fice had re­ceived more than 10 000 com­plaints, with the of­fice re­solv­ing 10 542 com­plaints in to­tal (this in­cludes some car­ried over from the pre­vi­ous fi­nan­cial year).

The amount clawed back for con­sumers in the set­tled or de­ter­mined cases also showed an in­crease: R60889786, up from R58343824 in 2016/2017.

Of the 10542 com­plaints re­solved in the 2017/18 year, 6303 (59.8%) were dis­missed, 2799 (26.6%) were non-jus­ti­cia­ble – mean­ing they fell out­side the om­bud’s man­date and were re­ferred to the ap­pro­pri­ate fora – and 1440 (13.2%) were re­solved in favour of the com­plainant.

Of the 1440 cases re­solved in favour of com­plainants, a large ma­jor­ity (1392) were set­tled be­fore de­ter­mi­na­tion stage.

The om­bud made 48 de­ter­mi­na­tions dur­ing the 12 months un­der re­view.

A break­down of the jus­ti­cia­ble com­plaints re­ceived ac­cord­ing to the dif­fer­ent types of prod­ucts shows that the short-term in­surance in­dus­try tops the list (it has done so his­tor­i­cally), but that com­plaints about long-term in­surance prod­ucts (life and dis­abil­ity in­surance) are not far be­hind:

● Short-term in­surance: 3243 (40.7%)

● Long-term in­surance: 3100 (38.9%)

● In­vest­ment: 1231 (15.4%)

● Re­tire­ment: 277 (3.4%)

● Med­i­cal: 126 (1.6%)

The out­go­ing om­bud, Nol­untu Bam (she was suc­ceeded in May by Naresh Tulsie), says in the re­port: “The num­bers con­firm that South African con­sumers have put their faith in the Fais Om­bud.

They trust the of­fice. It does not mat­ter to the con­sumer that he does not have to present him­self at the Fais Om­bud – he does so. Young, old, rich, poor, lit­er­ate, il­lit­er­ate – we have wel­comed them this year… It is an undis­puted fact the Fais Om­bud has changed the way the fi­nan­cial ser­vices game is played.” THE PRO­FILE Group, which sup­plies data on col­lec­tive in­vest­ments to the lo­cal fi­nan­cial in­dus­try, has in­creased its share­hold­ing in the fund rat­ing agency Plexcrown Fund Rat­ings to 100%.

The num­ber of col­lec­tive in­vest­ments of­fered by South African in­sti­tu­tions has grown to more than 1 500, out­num­ber­ing Jse-listed shares by three to one. Since 2005, Plexcrown has earned a rep­u­ta­tion as the lead­ing re­tail unit trust fund rat­ing agency in South Africa. “We pride our­selves on be­ing in the fore­front of sta­tis­ti­cal re­search, es­pe­cially in the unit trust in­dus­try where we have de­vel­oped rat­ing and in­for­ma­tion prod­ucts to serve our stake­hold­ers,” says Ernie Alexan­der, chair­man of the Pro­file Group.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.