In July 2021, the Complainant joined a medical aid scheme with the assistance of the Respondent, intending to enroll in a hospital plan. However, a 50% Late Joiner Penalty (LJP) was incorrectly added to her premium because the Respondent submitted an incomplete membership certificate lacking an end date.

The issue was whether the Respondent failed to exercise reasonable care and skill in providing financial services, resulting in financial loss. Under the FAIS Act and the General Code of Conduct (Sections 2 and 8), financial service providers must act honestly, fairly, and diligently.

The Respondent argued that the penalty was determined by the scheme’s underwriters and not their responsibility, but the Office found that the scheme had requested a corrected certificate, which the Respondent failed to provide due to internal oversight. This negligence led to the incorrect application of a 50% LJP for 23 months, totaling R24,552.50, instead of the correct 5% penalty of R2,455.25.

The resulting difference of R22,097.25 represented the financial loss suffered by the complainant, for which the Office found the Respondent liable and recommended settlement.

An agreement to settle the complaint for R22,097.50 was reached.