Am I my client’s keeper?

Most of the Ombud determinations we reported on, had a negative outcome for the advisor involved. It is nice to come across one where the Ombud found in favour of the broker. This case dates back to 2008, with the late Charles Pillai presiding, as it were.

The salient facts of the matter are as follows:

A client’s claim was rejected because he did not have a VESA approved immobiliser fitted to his vehicle, as required by the insurer. He claimed that the broker never conveyed this to him.

The broker, in his response, included hand written notes which he kept during a number of contacts with the client. Reference to the VESA requirement appeared regularly, and the Ombud found that it was evident that this was not something that was inserted afterwards.

The extract below from the Ombud’s determination provides an interesting perspective on just how far an advisor is supposed to go in getting his client to adhere to requirements.

The notion that Respondent should have followed up regularly until Complainant had complied is not founded anywhere in law. In fact, in Lappeman Diamond Cutting Works (Pty) Ltd v MIB Group (Pty) Ltd and another [2003] 4 All SA 317 (SCA), where the essence of the insured’s case was that the brokers, as experts in the field of diamond insurance would have known of the practice of doing ‘off– the- book’ transactions and should therefore have drawn the insured’s attention to the key clause in the insurance contract.

A broker does not, and cannot be expected to control the business of the insured. Even a specialist broker’s duty does not encompass the duty to ensure that the insured complies with his obligations under the policy. He is not the insured’s keeper. This duty, as specialist broker, is discharged when he has done everything reasonably necessary to draw the attention of the insured to obligations imposed by the policy. It is the insured’s responsibility to ensure compliance’.

Applying the principles to the facts of this case, I can say that it was not expected of Respondent to be ‘the insured’s keeper’. I find on probabilities and on the undisputed evidence that the Respondent had advised Complainant of the requirement to install a VESA approved immobiliser in the vehicle. Once Respondent had advised Complainant of this, he owed no further obligation to ensure, as Complainant seems to believe, that he should have done so. I am of the view that Respondent had done everything reasonably necessary to draw Complainant’s attention to the security requirements that needed to be installed on the vehicle and it was Complainant’s obligation to ensure that he adhered to it.

The complaint was dismissed.

Most of us are not overly keen on what appears at times to be unnecessary paper work. In this case, the advisor saved himself R46 000. Maybe it is worthwhile, after all.

Please click here to download the full determination.

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