Secondary

Assessment-disputed

FAIS Ombud – Loss assessment disputed

The recent Cornelissen determination by the FAIS Ombud provided insight into a number of very interesting aspects not previously covered in her determinations. The eventual finding is also something new for us.

Overcharging of fees

The complainant submitted that, contrary to their agreement, the fees charged were in excess of the agreed rates. He did a calculation of the overcharges and seeks payment of the amount, together with interest.

He also complained that respondent failed to inform him appropriately with regard to some of his investments and failed to take instructions, thereby causing loss.

The respondent pointed out that complainant’s case was based on subjective interpretation and his own calculation of how much he was allegedly overcharged.

In response to the complaint that there was a unilateral change in the agreed fee base and/or non-communication of substantial changes, the respondent points out that the agreed rates were applied and that there was no credible evidence that this was exceeded.

Inappropriate Advice

The complainant also asserted that the respondent failed to inform him appropriately with regard to some of his investments and failed to take instructions, thereby causing loss.

During the initial contracting stage, it was agreed that the adviser’s function would entail assisting the complainant with the preservation of his pension fund contributions. When the client indicated that he also had discretionary funds to invest, the respondent advised that he was unable to assist.

“The complainant’s response was that he merely needed access to the platform and will manage the portfolio himself. Complainant stated that he did not expect Brink to provide investment advice.”

Wrong party cited

Although the complainant indicated that his actions were against a specific individual, he laid the complaint against PSG Konsult. The FSP who employed the individual was later taken over by PSG Konsult. It was a condition of the contract that the respondent, PSG Konsult, would not be liable for any claims that pre-dated the effective date of the acquisition.

A second point in limine was raised that the complainant’s claim had prescribed in terms of the Prescription Act 68 of 1979. The respondent points out that on complainant’s own version he was aware of the rates charged since 7th July 2008 and was receiving statements regularly but made no objection to the fees charged until after 6th July 2011. There was no incident of interruption of prescription and therefore the complainant is precluded from making this claim.

The Ombud’s response to this reads:

“…in the light of how I intend to deal with the merits in this case, it will be inappropriate for me to make a decision in this respect. Accordingly I make no finding in respect of the two points in limine.

Complainant’s calculations

The parties could not reach agreement on this. The Ombud indicated that it had equally great difficulty in determining the validity of the calculations. It cited a number of requirements to be able to do, but noted that this was not available in the documentation before her.

“In order to meet these requirements an adversarial hearing is necessary. This Office does not have the resources to hold such a hearing nor do I deem it appropriate, in the circumstances of this case, to hold a hearing in this Office. As far as possible this Office tries to resolve matters informally, expeditiously and economically, using records.”

“I am therefore compelled to decline to determine this dispute and complainant must institute action in an appropriate court.”

Please click here to download this very interesting determination.

Comments are closed.