In January 2018, the Complainant invested R900,000 of her pension funds through the Respondent, seeking a investment that would generate monthly income. The Respondent recommended the Property Income Fund, an aggressive investment, to the Complainant without offering alternatives or adequately explaining the risks.

The dispute centered on whether the Respondent failed in its duty to provide suitable financial advice aligned with the Complainant’s risk profile, leading to financial loss. Under the FAIS Act and the General Code of Conduct (Sections 2, 3(1)(d), and 8(1)(a)), financial service providers must act honestly, fairly, and with due care, ensuring their advice is appropriate and well-documented.

Initially, the Respondent stated that the Complainant signed a Record of Advice and application forms acknowledging the product’s risk. However, the Office found contradictions in the documentation, insufficient evidence of informed consent, and a failure to consider the Complainant’s financial situation, dependents, and limited investment experience. The Respondent’s recommendation was misaligned with the Complainant’s needs, and the Record of Advice appeared to be fabricated. This Office reiterated that the financial loss was linked to the inappropriate advice given by the Respondent.

During its investigation, the Respondent later acknowledged that if the Complainant had invested in a money market account with the same income withdrawals, the fund value on the termination date would have been R795,529.80, compared to the R115,668.88 she actually received, resulting in a shortfall of R679,861.80.

The complainant was awarded R679,861.80 in settlement.