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‘Fund member should lodge a complaint against his adviser, not the Adjudicator’

The Financial Services Tribunal (FST) has upheld a decision by the Pension Funds Adjudicator to dismiss a complaint against a Discovery preservation fund, saying the applicant’s complaint was, in fact, against his financial adviser.

The applicant, “IK”, joined the Discovery Classic Pension Preserver Plan in 2014. More than R5.3 million was transferred from his previous retirement fund to the Discovery fund.

In his complaint to the Adjudicator, IK contended that:

  • He was quoted 13.1% interest on his investment in the Discovery fund;
  • The fund breached section 14 of the Pension Funds Act when he was denied an opportunity to transfer the fund credit from the Discovery fund to another fund;
  • His financial adviser charged him excessive fees, or he was charged fees to which he had not agreed; and
  • His investment did not perform satisfactorily, and he was entitled to compensation.

The Adjudicator dismissed the complaint, finding that IK:

  • Was provided with a membership certificate and a fact file stipulating all the fees and charges;
  • Signed a declaration that indicated he was aware that his investment may go up or down and that past performance was no indication of future performance;
  • Selected the investment portfolios and understood the risks of the portfolios he selected;
  • Was provided with quarterly investment statements detailing the fees deducted from his investment, as well as information on how his investment portfolios were performing;
  • Signed the application form wherein he declared that he had read and understood the product quotation; and
  • Failed to establish that he was entitled to the relief sought, and the Discovery fund could not be held liable for any loss due to negative market movements.

‘Beware the signer’

The FST said IK had not adhered to rule 10 of the tribunal’s rules, which states that an application for reconsideration “must contain the full particulars of the grounds (stated succinctly) on which the application is based”.

The tribunal said it seemed that IK wanted compensation of more than R6m for loss of capital and income and humiliation. He also wanted an order declaring that the agreement with the Discovery fund was null and void. These claims fell outside the tribunal’s competence, which was circumscribed by section 234 of the Financial Sector Regulation Act.

The FST said IK signed the application form wherein he declared that he had read and understood the product quotation.

In its view, the Adjudicator had correctly relied on the decision in Roux v Cadbury Schweppes Pension Fund [2001] 8 BPLR 2401 (PFA), where it was held that while retirement funds have a duty to provide adequate material information to members, members also have a duty to seek information and clarity on their investments.

“This case did no more than highlight the legal maxim caveat subscriptor, literally ‘beware the signer’. Put differently, a party who signs a written contract is presumed to be aware of all the terms and conditions contained therein and is bound accordingly.”

It did not assist IK’s case to complain after the event that his investment did not perform as well as he had anticipated, when the agreement he signed clearly indicated there were no guarantees in this regard.

IK seemed to suggest that his signature was clandestinely obtained, and that more than one version of the document existed.

The FST said these allegations, like the other aspects of IK’s complaint, related to his financial adviser’s conduct. As such, his complaint should be directed to the FAIS Ombud.

The tribunal remarked in passing that the Adjudicator indicated that her office would forward a copy of her determination to the FAIS Ombud to determine whether any conduct issues required further investigation.

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