Weekend Argus (Saturday Edition)
Property syndication advisers ordered to pay up
THE FINANCIAL advice ombud, Noluntu Bam, recently issued two more in a long string of determinations against financial advisers who put their clients into doomed property syndication investments.
The advisers have been ordered to repay their clients – in both cases pensioner couples – the money they invested.
Martin Holtzhausen and his company, Martin Holtzhausen Financial Services of Dormehlsdrift, George, must pay Mr and Mrs V the R520 000 they invested – and subsequently lost – in two Sharemax developments in April 2006 and December 2008: R400 000 was invested in a scheme known as Shopmakers Village, and R120 000 in the Zambezi development.
Stephanus du Preez and his company, The Meadow Group of Newton Park, Port Elizabeth, must pay Mr and Mrs X the R160 000 they invested across three schemes between May 2005 and April
2010: Theresapark Retirement Village, The Villa Retail Park (both Sharemax developments) and Highveld Syndication 15, promoted by Picvest.
The ombud’s argument in these cases is that the advisers did not properly fulfil their obligations in terms of the code of conduct under the Financial Advisory and Intermediary Services Act. The code states that advisers must suggest a suitably appropriate investment after taking their clients’ circumstances into account. In these cases, the investments were far from appropriate for the life savings of vulnerable pensioners.
In the Holtzhausen determination, Bam notes: “Had [Holtzhausen] truly understood what he was advising [his clients] to invest in, he would have considered more appropriate alternatives … [Holtzhausen] knew that [his clients] were reliant on him for advice and, in investing in these schemes, they were following his advice … The complainants sought investments that would keep their capital intact. The prospectuses were clear: the shares on offer were unlisted … [they] were high risk and inappropriate for [Mrs and Mrs V].”