Retired financial adviser Johan Willem van der Walt, of Margate in KwaZulu-Natal, is facing a bleaker financial future, because he is now being forced to repay a total of R1.26 million to pensioners to whom he gave inappropriate investment advice.
The downturn in Van der Walt’s fortunes is the result of one of the two determinations that financial advice ombud Noluntu Bam issued this week.
In both cases, Bam was not satisfied with the advice that the financial advisers gave to their clients to switch from comparatively low- or medium-risk investments to high-risk investments, particularly because both complaints involved pensioners.
In the second determination, Port Elizabeth financial advice company R&S Walsh Investment Consultants, its owner, Ronald Walsh, and a representative, Guy Coleman, were ordered to repay a 69-year-old pensioner, Christoffel Schutte, the R494 392 that he lost when his underlying Sanlam pension investment was switched from a conservative to a high-risk portfolio without his approval.
Earlier this year, Bam ordered Van der Walt to repay R460 000 to KwaZulu-Natal South Coast pensioner Stephanus Malcolm van der Merwe, and his son, Charl, who invested, through some complex deals, in Imuniti Holdings, the troubled pharmaceutical and wellness firm that listed on the JSE’s alternative exchange, AltX, in November 2006.
This week, Bam ordered Van der Walt to pay R800 000 of the R880 000 that he advised another pensioner, Fransisca van Zyl, to invest in Imuniti.
Van der Walt advised Van Zyl to switch her investments from a diversified unit trust portfolio into the Imuniti shares.
Van Zyl reduced her claim to the maximum compensation of R800 000 that Bam may order, forgoing R80 000.
Bam found that Van der Walt had failed to meet the requirements for appropriate advice set down in the general code of conduct issued in terms of the Financial Advisory and Intermediary Services (FAIS) Act.
In the ombud’s other determination, Schutte, who is terminally ill, told Bam that Coleman had asked him to sign blank forms, which were taken to Walsh for his final say.
Schutte’s investments, which were his entire retirement savings, were switched in May 2008 to “very risky portfolios, exposing his investment to severe market shocks he could not tolerate”.
In September 2009, another financial adviser switched Schutte back into a more conservative portfolio, which resulted in a 57-percent drop in his investment value in 12 months.
Sanlam provided Bam with comparative performance figures that showed that if Schutte had not switched his investments, he would have been better off by R494 392.
Bam found that both Coleman and Walsh had contravened the FAIS Act’s code of conduct by failing to render financial services with the requisite skill, due care and diligence, leading to Schutte sustaining losses in the market downturn.
* You can contact the Ombud for Financial Services Providers, Noluntu Bam, as follows:
Telephone: 012 470 9080
Fax: 012 348 3447