sanlam to repay widow R254k
04 April 2008
Insurer Sanlam has to repay a widow more than R254 000 after one of its brokers invested her money with Fidentia, the Ombud for Financial Service Providers has ruled. Sanlam claimed that broker Willie Jordaan ignored explicit instructions on where to invest client's money, the ombud said in a statement.
The deputy ombud however found Sanlam liable for the loss as investors seemed to have been lulled into a false sense of security because Jordaan worked for a major player in the financial services industry.
Sanlam claimed that Jordaan had embarked on a "frolic of his own".
The widow, Elizabeth September of East London, approached Sanlam when she retired, hoping to be able to live off the returns of her investment. She said Jordaan motivated her to invest with Fidentia Asset Management. The investment was made through a trustee of private investment trust Antheru.
September received a monthly income from her investment until February 2007, when it stopped. Fidentia was placed under curatorship following mismanagement and misappropriation of investor's money, allegedly by executive chairperson of Fidentia Holdings, J Arthur Brown.
When September approached Sanlam, they dissociated themselves from Antheru and Fidentia and denied any liability for her loss. She then approached the ombud. The deputy ombud expressed appreciation for Sanlam's co-operation during the investigation of September's complaint. Jordaan worked for Sanlam until his contract was terminated following disciplinary proceedings in May 2007.
The ombud hoped the ruling would "prod financial services providers to more stringently scrutinise their brokers' activities".
Seventeen other people for whom Jordaan invested a total of R2.19-million in Fidentia, would in all likelihood lose all or most of it, according to Sanlam. Most of them were retired and had unsophisticated knowledge of investments and financial markets.
According to many of their statements, they appeared to have based their decision to invest in Fidentia on the fact that Jordaan was an employee of Sanlam.