In December 2024, the FAIS Office issued a press release highlighting the importance of reading policy terms and conditions, especially regarding jewellery items specified in a short-term insurance policy.
The press release referred to a complaint where the complainant had insured his wife’s jewellery under an “all-risk” policy. At that stage the matter had not been finalised yet. Due to the importance of consumers (and advisors) understanding the implications and limitations of “all-risk” provisions, the Office has issued a new release on this now finalised matter.
In September 2022, the complainant’s wife’s tennis bracelet and diamond earrings (valued at R785,000) were stolen on an international flight. She had removed the jewellery and placed it in a bag in the overhead locker. On arriving at their hotel, they discovered the jewellery was missing. The claim was rejected due to the policy requiring jewellery worth over R150,000 in value to be stored in a locked safe when not worn. The insurer made a goodwill payment of R135,000 (R150 000 less R15,000 excess) which was accepted by the Complainant.
The Complainant lodged a complaint against the advisor, arguing that he was never clearly informed about the warranty requiring jewellery to be locked in a safe when not worn. The Complainant believed “all-risk” coverage meant coverage under all circumstances.
In response, the respondent referred to policy documents and renewal emails that included the jewellery warranty requirement and the complainant confirming that he understood. The Office also found that the warranty was clearly set out in the policy.
However, the respondent was unable to provide a copy of the record of advice when the policy was taken out, blaming system migrations and the policy’s age.
Section 9 of the General Code of Conduct for Authorised Financial Services Providers and Representatives (‘the Code’), requires that Financial Services Providers (‘FSPs’) keep a record of advice given to clients. Furthermore, Section 3 (2)(a) of the Code requires that FSPs keep accurate records of the advice provided.
The record of advice is a crucial document that the respondent is obliged to retain and produce when required, especially if advice is disputed. Due to the respondent’s inability to produce this evidence, the Office recommended that the Respondent offer a settlement of R50,000.00. Both the respondent and the complainant accepted the settlement
The matter serves as a reminder to FSPs to ensure that they carefully record and store all information as required by the Code.
The matter also highlights the Office’s commitment to resolving complaints in a procedurally fair, informal, economical, and expeditious manner, with reference to what is equitable in all circumstances. To execute this commitment, the Office always explores every available avenue to resolve complaints between parties on a settlement basis without resorting to formal adjudication by way of a determination. This process is advantageous to all parties as it is far more expeditious and does not expose them to potential ongoing litigation and crippling legal costs.
Should you believe that you have been financially prejudiced because of the financial service rendered to you with respect to a regulated financial product, please lodge a written complaint directly with the service provider. If the complaint remains unresolved after six weeks, you can visit our Complaints Portal at www.faisombud.co.za and select ‘Lodge Complaint’. Alternatively, you may submit a complaint in writing to info@faisombud.co.za. You can also call our Client Care Centre at (012) 762 5000 or Sharecall at 086 066 3274 for assistance in submitting a complaint.
