The FAIS Ombud is not pulling his punches
A broker, Muriel Oosthuizen, has been ordered to pay back R800,000 plus interest to an investor that she scammed
Two recent cases that came to light show just how tough the FAIS Ombud can be
when it comes to protecting investors from scams unwittingly brought on
to them by their brokers. In both cases, the brokers were ordered to pay back
the money lost, with interest, in a bid to highlight the ombudsman zero
tolerance attitude for these type of incidents.
The first case involved a retired farmer who sought the advice of a licensed
financial services provider on how best to invest the proceeds from the sale of
his farm. Muriel Oosthuizen promised to generate monthly income for Mr. Nebbe
from the investment but instead invested the money into her own business. While
Oosthuizen claimed that Nebbe knew that the investment would be in property, the
ombudsman said that this was definitely not clear in the documentation supplied
by the broker.
"If Respondent had wanted Complainant to invest in her property business, then
surely there should have been a comprehensive agreement covering all aspects of
the arrangement," ruled the ombudsman. "If respondent wants me to believe that
complainant knowingly entered into a private investment with her for a sum of
R750,000, then one would at the very least expected that complainant should have
had the benefit of consulting with his attorneys. It cannot be expected that
complainant, a farmer and a lay person, 70 years old at the time of the
investment and with a grade 9 education, would be able to appreciate this is not
a conventional investment in a recognized financial product."
Oosthuizen was ordered to pay the client the sum of R800,000 plus interest.
The second scam case involved a client who invested a substantial amount with
a financial services firm through a broker, only to be told that the money had
been lost when the forex firm into which the money had been invested went
insolvent. In this case, the ombudsman held the broker and investment firm
jointly responsible for investing in a pyramid type fund and ordered them to pay
back the money which the client had lost.