Bid to block ombud’s rulings is postponed
An urgent High Court application to prevent Noluntu Bam, the Ombud for Financial Services Providers, from issuing determinations on complaints against a Gauteng-based financial adviser, Deeb Risk, who advised mainly pensioners to put their money into imploding Sharemax property syndications, has been postponed until next year.
Risk, on the legal advice and with the financial backing of a Santam-owned insurance company, Stalker, Hutchison and Admiral (SHA), gave notice of the urgent application last week of their intention to stop Bam hearing complaints with immediate effect.
SHA, which has provided Risk and his company with professional indemnity insurance, instead of supporting Risk in repaying ill-advised pensioners, has sought to halt Bam in her tracks from protecting consumers.
Risk, with the support of the Santam subsidiary, lodged an application earlier last month to stop Bam from issuing determinations, arguing that the matters should be referred to the High Court.
This move, Bam said last week, would nullify the advantages of her office for consumers, who would generally not be able to afford to go to the High Court to take on insurance companies with extensive cash and legal resources. She said many of the complainants were pensioners who had lost a large portion of their assets.
The urgent application was made when Bam continued to issue determinations against Risk, despite a non-urgent application to block her in her tracks and, in effect, nullify the office of the ombud.
The office was established in terms of the Financial Advisory and Intermediary Services Act to give consumers cheap and easy access to compensation when illadvised on their investments.
By last week, when the urgent application was launched, Bam had issued two determinations against Risk and his company, D Risk Insurance Consultants, ordering them to repay R1.2 million plus interest to a 72-year-old widowed pensioner, Elise Barnes.
This week she issued a third determination against Risk and his company. She ordered them to repay R780 000 to an 82-year-old pensioner, Margery Salmond, whom Risk advised to place her savings into a Sharemax property syndication.
Risk earned a commission of at least R46 800 (six percent) from the investment, which he did not disclose to Salmond, according to Bam’s determination.
However both Salmond and Barnes may have to wait a bit longer for their money. Agreement was reached between the legal teams of Risk and the ombud that the urgent application will be held over until next year.
In the meantime, the ombud will not send her determinations to the High Court until the new court date.
Once the determinations are sent to the High Court they, in effect, become an order of the court from that date. A 30-day clock then starts ticking for any appeal to be lodged against the determination with the Financial Services Appeal Board.
Bam says she will continue to make determinations in complaints from six others against Risk.