Background:

1. The Complainant purchased a Toyota Hilux in December 2022 and insured it under his business policy facilitated by the respondent.
2. On 12 December 2022, the Complainant received confirmation of a cover letter from the Respondent via email and forwarded it to the dealership and Investec Bank, taking delivery of the vehicle on 4 January 2023, in good faith, believing that all insurance conditions had been satisfied.
3. The Complainant stated that the cover letter he received indicated “yes” under the section of tracking device requirements, which gave him the impression that the device already installed in the vehicle met the insurance requirements. At no point was he informed either before or after receiving the cover letter that a specific approved tracking unit was still required.
4. The vehicle was stolen on 21 January 2023, and the insurer repudiated the claim due to non-compliance with the tracking device condition. The policy required an approved tracking device with tracking and recovery functionality. The device installed in the Complainant’s vehicle did not meet these specifications.
5. The Complainant asserted that the Respondent failed to adequately inform him of the specific tracking device requirements, and that no follow-up communication was made to ensure compliance with the tracking conditions.
6. The Complainant argued that the Respondent’s negligence in advising and disclosing material terms contributed to the rejection of his claim.
7. The Respondent denied liability, stating that the tracking device requirement was clearly communicated via email on 12 December 2022.
8. The Respondent argued that the Complainant, an experienced policyholder, failed to act on the disclosed requirements despite prior knowledge of similar conditions under other policies. This was based on the fact that the Complainant had multiple vehicles insured under various policies, all of which required tracking devices for theft and hijacking cover. In each case, the Complainant had complied with these requirements.
9. In support of this, the Respondent provided a Record of Advice for when the policy was incepted in February 2021, which stated that a tracking device is required for all vehicles exceeding R350,000.00. The Respondent submits this, as well as the declaration signed by the Complainant on 21 April 2022, noting that all vehicles must have a tracking device was proof of the disclosure requirement.
10. The Respondent also maintained that its advisory role does not extend to enforcing compliance with policy conditions.

Assessment of Evidence:

11. The Ombud reviewed the evidence, including the Record of Advice and prior declaration signed by the Complainant in 2021 and 2022, as well as the email sent on 12 December 2022.
12. The Ombud found that the Record of Advice from February 2021 and the declaration from April 2022, submitted by the Respondent as evidence of disclosure, predate the addition of the vehicle in December 2022. These documents cannot demonstrate compliance for a vehicle that was not yet included in the policy.
13. Section 7(1)(a) of the General Code of Conduct for Authorised Financial Services Providers and Representatives (“the Code”) places a duty on Financial Services Providers to disclose any material terms of the contract. This, therefore, places an obligation on the Financial Services Provider to place the client in a position to make an informed decision. This can only be done if the client has the required information beforehand.
14. The above is further enforced by section 7 (1) (c) (vii) of the Code which states that a provider must provide full and appropriate information of the following: “concise details of any special terms or conditions, exclusions of liability, waiting periods, loadings, penalties, excesses, restrictions or circumstances in which benefits will not be provided”.
15. The obligation is to provide advice and disclosure relevant to the actual product or change being effected. The above evidence, therefore, does not demonstrate compliance with the vehicle in question.
16. With respect to the email of 12 December 2022, wherein the tracking device is noted, it was also stipulated that it was the Complainant’s duty to provide a certificate of installation. However, the Respondent has provided no evidence to demonstrate their actions when a compliance certificate was not received.
17. The Code imposes a duty on the broker to provide the necessary information to the client and to follow up to ensure it has been done. Simply relying on the policy conditions renders any advisor (and the ongoing fees paid by the client) irrelevant to the entire financial transaction. The specific purpose of an advisor is to keep the client fully informed and updated on any material conditions.
18. In the email of 12 December 2022, the Respondent advises the Complainant that an installation certificate must be provided. It will then be reasonable to expect the Respondent to follow up to confirm whether the device was installed. The Respondent admits that this was not done

Outcome:

19. The Ombud determined that the Respondent’s failure to act diligently and ensure the Complainant was fully informed amounted to negligence and a breach of the FAIS Act and Code, which resulted in the repudiation of the Complainant’s claim and subsequent loss occasioned by the theft of the insured vehicle.
20. The Ombud recommended that the Respondent settle the Complainant’s claim.
21. The Respondent accepted the recommendation and offered the Complainant R820,000.00 in full and final settlement. The Complainant accepted the offer.