The Complainant purchased a Life Annuity with Capital Preservation from the Respondent in 2007 using her late husband’s pension.

In 2023, facing financial hardship, she tried to withdraw funds but was told that the annuity did not allow withdrawals and that the capital would only be accessible upon her death.

The issue was whether the adviser adequately disclosed the life annuity’s withdrawal restrictions. Under the FAIS Act, particularly Section 7(1)(a)-(c) of the General Code of Conduct, financial service providers are required to disclose all material terms and risks before completing a transaction.

The Office investigated the matter and found that the Respondent failed to provide evidence of such disclosures, and the documents provided did not explain the withdrawal limitations. Although the annuity restrictions were compulsory under legislation, the Respondent still had to inform the Complainant of these restrictions.

The Office concluded that the Respondent breached its duty under the FAIS Act and recommended that the Respondent resolve the matter by making a suitable compensatory offer.

A settlement amount of R20,000.00 was offered to the Complainant, which she accepted.