Background:

1.) The Complainant held a motor vehicle insurance policy covering his 2015 Land Rover Defender. The policy commenced on 1 October 2018. The Respondent, a registered financial service provider, took over as the broker on the policy in 2021.

2.) The Complainant advised that vehicle accessories valued at approximately R71,462 had been disclosed and recorded on the policy.

3.) On 19 September 2025, the insured vehicle was involved in an accident. The insurer settled the claim in the amount of R325,268, being the sum insured reflected on the policy schedule.

4.) The Complainant contended that the vehicle’s retail value at the time of loss was approximately R478,800 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.

5.) The Complainant withdrew from the Agreement of Loss, alleging that the offer was insufficient and sought rectification of the claim to reflect the correct vehicle value and all declared extras.

6.) The Respondent submitted that when it assumed responsibility for the policy in 2021, the sum insured already reflected approximately R325,268 and that this value had not been introduced by the brokerage. The Respondent further argued that the matter was not advice-related.

7.) The Respondent advised that a meeting had taken place on 23 February 2021 with the Complainant’s mother and partner as representatives of the Complainant, who was unavailable at the time. The Respondent maintained that the vehicle was already insured at the disputed value when the brokerage took over the portfolio.

8.) The insurer confirmed that the vehicle was insured on a Retail Value basis throughout the policy period. However, where the sum insured is lower than the prevailing retail value, a claim settlement is limited to the sum insured reflected on the policy schedule.

Assessment of Evidence:

9.) The evidence showed that when the Respondent assumed responsibility for the policy in 2021, no documented review of the policy, insured value, or the Complainant’s insurance needs was conducted or retained.

10.) Following the claim, an Agreement of Loss confirmed a settlement of R325,268, being the insured value recorded under the policy.

11.) Although the Respondent argued that it did not introduce the disputed insured value, there was no documentary evidence demonstrating that any review, advice process, or communication warning the Complainant of the risk of underinsurance had been undertaken between 2021 and the date of loss.

12.) The Office noted that Section 2 of the General Code of Conduct for Authorised Financial Services Providers and Representatives (‘the Code’) requires financial services to be rendered with due skill, care and diligence. The Respondent failed to demonstrate compliance with this section of the Code when it assumed responsibility for the policy in 2021.

13.) Furthermore, Section 8(1) of the Code requires that a financial services provider take reasonable steps to seek from the client appropriate and available information from the client to enable the provider to provide the client with appropriate advice and identify the financial product or products that will be appropriate to the client’s risk profile and financial needs. The respondent failed to ensure that the cover provided appropriately covered the Complainant’s needs.

14.) As a result, the Respondent was also unable to comply with Section 7 (1)(a) of the Code, which states a financial services provider must provide a reasonable and appropriate general explanation of the nature and material terms of the relevant contract or transaction to a client, and generally make full and frank disclosure of any information that would reasonably be expected to enable the client to make an informed decision

15.) . The Respondent failed to provide evidence of any needs analysis, record of advice, annual review, or communication regarding the adequacy of the insured value. This constituted non-compliance with Sections 2, 7 and 8 of the Code

16.) The Office found that the Respondent had access to updated retail values through the insurer’s systems. A reasonably diligent broker would have identified the significant discrepancy between the insured value of approximately R325,268 and the prevailing retail value of approximately R478,800 and would have alerted the Complainant to the risk of underinsurance.

17.) The Respondent’s failure to conduct periodic reviews and provide appropriate advice deprived the Complainant of the opportunity to make an informed decision regarding the adequacy of his insurance cover.

18.) This Office was therefore of the view that the Respondent failed to exercise due skill, care and diligence and did not adequately document or provide advice as required under the FAIS framework, resulting in prejudice to the Complainant.

19.) The Office recommended that the matter be resolved through a fair and reasonable settlement in accordance with the Respondent’s obligations under the Code.

Outcome:

20.) Following the Office’s recommendation, the Respondent agreed to pay the difference between the policy’s insured value of R325,268 and the vehicle’s market value of R478,800.

21.) The settlement calculation resulted in a difference in cover of R153,532, less an amount of R38,292.10 representing additional premiums that would have been payable for the higher level of cover from March 2021 to September 2025, leaving a settlement amount of R115,239.90.

22.) The Complainant accepted the settlement on 27 May 2026, and the Respondent confirmed payment upon receipt of the required documentation.

23.) The Office considered the matter resolved and closed its file.