The Complainant claimed that the Respondent failed to disclose the risk of underinsurance and the implications of the average clause at the start of the policy and during annual reviews.

The question was whether the adviser fulfilled their legal duty to inform the Complainant of critical risks. Under the FAIS Act, Sections 2, 7(1)(a)-(c), and 9 of the General Code of Conduct, financial service providers must act with care, disclose all crucial terms before completing a transaction, and keep proper records of advice. The Respondent did not provide any documentation confirming such disclosures and relied on vague email and post-sale policy documents, which do not meet the required standards.

The Office found this to be a clear violation of regulatory rules. It is recommended that the Respondent resolve the issue by offering appropriate compensation to the Complainant, which aligns with the principles of fair treatment under the Treating Customers Fairly (TCF) framework.

The Respondent subsequently offered to settle the amount of R221,902.47 to the Complainant without applying the average.