Fais Ombud rules against complainant in Sharemax case
The Afrikaans saying “Slim vang sy baas” is very apt with regards to a recent Ombud determination in which, for once, the adviser was not held liable for a client’s loss.
During January 2012, two complaints were filed with the Ombud’s office against the respondent. The complaints arose from investments made by complainant in a Sharemax syndication. The basis of the complaints was that the respondent advised the complainant to invest in high risk schemes that were incompatible with his personal circumstances as a pensioner.
During July 2009, the complainant invested an amount of R200 000 in a Sharemax scheme. A year later, in July 2010, the complainant invested a further amount of R300 000 in the same syndication scheme. The complainant states that he specifically sought the respondent’s assistance, based on their relationship, going back eight years. Prior to these two investments, which are the subject of this complaint, complainant had made seven investments into various Sharemax property syndications, over a period of five years, with the assistance of respondent.
In his response, the adviser indicated that the complainant had approached Sharemax directly to make the 2010 investment, because of the mistaken belief that the commission payable to respondent would come from his capital investment. The complainant completed the application form for shares at the offices of Sharemax, and only consulted with the respondent two days later as he required the respondent’s signature on the documentation.
According to the respondent, the complainant was so satisfied with his previous investments that he, of his own accord, opted to make the last investment with Sharemax.
In conclusion, the respondent indicated that he regarded the complainant to be greedy. He noted in his response:
“Om 75 jaar oud te wees, gee jou nie die reg om te lieg soos ‘n tande-trekker nie.”
Concerning the evidence, the Ombud states:
“The case presented to this Office is a hodgepodge of contradictory statements. There is a material dispute of fact as to whether complainant was in fact persuaded by respondent to continue investing in Sharemax.”
“Complainant’s version made no reference to his visit to Sharemax’s office to make the investment of 2010, nor does it include his interactions with a Mr Coetzee who was allegedly a consultant employed by Sharemax.”
“Parties making use of the Office to resolve disputes are expected to assist the Office by providing facts at their disposal, regardless of whether a particular aspect may not be favouring their version. That complainant chose not to deal with respondent’s allegations, which means that the Office cannot be of any further assistance in the matter.”
“This leads me to conclude that the question whether respondent rendered financial services to complainant would be best suited to oral evidence and cross examination in order to arrive at the truth.”
“In the premises, I find that it would be more appropriate that the complaint be dealt with by a Court, as provided for in Section 27 (3) (c) of the FAIS Act.”
I, in turn, find this quite surprising, to say the least. The client obviously lied, and therefore the complaint should have been dismissed.
Please click here to download the Ombud's decision.
Paul Kruger: Moonstone Compliance (Pty) Ltd
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