1. PRESENTATION TO THE PARLIAMENTARY PORTFORLIO COMMITTEE FOR FINANCE 23 AUGUST 2005

2. INTRODUCTION The Office is mandated to resolve complaints by means of mediation, recommendation and adjudication. The Office became jurisdictionally competent to resolve complaints as of the 30 September 2004

3. MESSAGE TO FINANCIAL SERVICES PROVIDERS (FSP’s) That they can not just continue to do business as usual as they used to prior to the coming into operation of the Act; The FAIS Act requires FSP’s to do business fairly, honestly in order to protect the interests of the consumer and to uphold the integrity of the Financial Services Industry.

4. ACT WILL IMPROVE QUALITY OF ADVICE FSP’s have to own the ADVICE and INTERMEDIARY SERVICE they render to consumers and are accountable for it; -- Where the Office finds that the consumer has been misled or that the service was rendered negligently or willfully causing financial prejudice to the consumer, the consumer would have to be compensated.

5. THE CASE OF NEGLIGENCE IN RENDERING A FINANCIAL SERVICE Complainant, Mr Mills, a pensioner had been persuaded to move into a new medical scheme by former employer; Broker undertaking to see to the move; After six months, complainant still not on medical aid; Wife fell ill and hospitalised. Broker had to pay for being negligent.

6. MR MOKOENA Failure to carry out client’s instructions then fobbing him off with excuses that “once policy is put into place, it cannot be reversed even though the complainant wanted to invest in a fixed deposit; Complainant’s mistake: Inability to notice that even though he was in a bank, his funds were now being invested by Long Term Insurance Company.

7. INAPPROPRIATE ADVICE Complainant Allan Robert Stephenson had been given inappropriate advice for his investment; The advice did not take into account his need for money in the immediate future; Did not take into account what other investments the complainant already had; Nedbank ordered to pay back.

8. TYPES OF COMPLAINTS That some Financial Services Providers out there show no regard for their clients’ interests; Some FSP’s do not understand the products they sell; That some FSP’s focus more on commission than their clients’ interests; Bullying consumers to buy products they do not need.

9. EXAMPLES CONTINUED… Misleading a client about various terms available on a product; e.g. ( case of applicable periods to endowment) Advising client that its legally impossible to retire from an RA at age 55 ( not true); Negligently advising client to take more cover for disability without observing the LOA Code on disability;

10. Continued…. Deliberately advising clients that insurer will pay disability cover which will be two times than that payable by the RAF in case of disability caused by motor vehicle accident; Negligently advising clients to take out investment (NOT RA) because the premiums will be tax deductible ( not true). The Income Tax Act specifically prohibits this;

11. Continued…. Over selling funeral cover in respect of one life assured. Only advising client at claim stage that they are in fact over insured. A simple needs analysis could have revealed the client’s position; Replacing policies solely for commission reasons; Replacing policy without making a genuine effort to inform client of what they need to know AND MANY MORE.

12. STATISTICS Thus far, the Office has received1403 complaints both for the period prior to and post the 30 th September 2004. Of these:- 879 – dismissed; 251 – still pending; 30 – in our investigation unit; 162 – referred to other forums; 81 resolved in favour of the consumer. Money put back in the pocket of the consumer: = R1 035 760.02

13. THANK YOU