Ombud ducks deVere probe

TIGHT-LIPPED: WON’T EXPLAIN WHY OFFSHORE DEALS ARE OFF LIMITS

It would appear offshore investments fall beyond the ability of the FAIS ombud to investigate, but it’s not saying why.

Several recent decisions by the the FAIS ombud have raised doubts about its will or capacity to fulfil its duties. In six separate cases, the ombud has said the matters would be more appropriately dealt with by the courts as it does not have “adequate facilities” to make proper determinations.

Offshore portfolio

Most matters relate to complaints laid against international consultancy deVere, the first filed in September 2014 by John Eccles. He invested £304 618 in April 2010 in what was meant to be a moderate-risk offshore portfolio aimed at long-term capital growth.

By April 2014, however, his investment was worth just £20 254. This included a withdrawal of £30 000, but even taking that into account he had lost more than 80% of his money.

This astounding loss was incurred because all of Eccles’ money had been moved into the shares of a single, highly speculative oil and gas exploration company. Initially these shares performed strongly, but in late 2012 they collapsed and destroyed his savings.

In his complaint, Eccles claimed deVere representatives Craig Featherby and Neil Pretorius not only neglected his interests but were never in a position to offer the service they had promised.

deVere argues Eccles executed his own investment choices against their advice. Eccles says if he wanted to control his own investments there would have been no need for him to move from his previous broker and pay high fees.

Over two years, the ombud communicated only a few times with Eccles and appeared no closer to making any kind of ruling. In September it confirmed to Business it had instructed deVere to answer specific questions relating to the investment.

Three months later, the ombud abruptly informed Eccles it was dismissing his complaint, saying it would be better handled by the courts as the probe involved international entities.

The ombud did not inform Eccles that he was entitled to appeal its decision, and told Moneyweb it was “not answerable to anyone other than to the structures provided for in the FAIS Act”.

It was only after Business queried the ombud’s position with National Treasury and the Financial Services Board (FSB) that it became evident Eccles could appeal.

He did so, but his appeal was dismissed by the ombud and the FSB Appeals Board.