Adv John Simpson, the FAIS Ombud
A recent case the Office dealt with illustrates what can happen when a broker fails to comply with his duties under the General Code for Financial Services Providers and fails to conduct annual reviews.
The Complainant held a motor vehicle insurance policy since 2018 covering his 2015 Land Rover Defender. The Provider took over as the broker on the policy in 2021. On 19 September 2025, the insured vehicle was involved in an accident, and the insurer settled the claim for R325 268.00, the sum insured reflected on the policy schedule. The Complainant contended that the vehicle’s retail value at the time of loss was approximately R478 800.00 and that the settlement amount did not adequately reflect the vehicle’s true value or the declared accessories. He further submitted that the broker failed to conduct regular policy reviews and ensure that the vehicle remained adequately insured. The Provider submitted that when it assumed responsibility for the policy in 2021, the sum insured already reflected approximately R325 268.00 and the brokerage had not introduced this value.
The Office found no evidence to show that the Provider reviewed the policy in 2021 or conducted any annual reviews thereafter. The Provider had a duty under the Code to review the policy and demonstrate compliance with Sections 2, 7 and 8 of the Code. These sections require financial services to be rendered with due skill, care and diligence, that information be sought from the client, and that appropriate advice is provided. The Provider must further review the policy at least once every year. A proper annual review of the policy would have alerted the Complainant and the broker to the vehicle value discrepancy, and the loss would have been avoided.
Following the Office’s recommendation, the Provider agreed to pay the difference between the policy’s insured value of R325 268.00 and the vehicle’s market value of R478 800.00, less the higher premiums which would have been payable over the period. This resulted in the Complainant accepting the final settlement payment of R115 239.90.
The Office encourages Providers to ensure that they do thorough reviews of their client’s policies at least once every year. Annual reviews provide an excellent opportunity to ensure the policy remains appropriate and to explain material policy terms to the client. A thorough review significantly reduces the risk of problems arising later.
Consumers are similarly encouraged to insist that their broker do a detailed review of their policies with them at least once every year. A proper review may take a few hours but is well worth the time to ensure they are properly insured and aware of any exclusions and material conditions.
If you believe you have been financially prejudiced as a result of the advice and/or intermediary service rendered by a Financial Services Provider please lodge a written complaint directly with the Provider. If the complaint remains unresolved after six weeks, you can visit our Complaints Portal at www.faisombud.co.za and select ‘Lodge Complaint’. Alternatively, you may submit a written complaint to info@faisombud.co.za. You can also call our Client Care Centre at (012) 762 5000 or Sharecall at 086 066 3274 for assistance in submitting a complaint.
ENDS
