CAPE TOWN - The Fais Ombud’s 2017/18 annual report contains a number of case studies in which consumers were compensated after intervention by the ombud’s office

Mr J and the cancer benefit

In February 2009, Mr J applied for a long-term insurance policy, which provided cover for life, disability and dread disease, in the amounts of R500000, R200000 and R200000 respectively.

In 2015, Mr J was diagnosed with early-stage prostate cancer, which was detected before it had begun to spread. He lodged a claim with his insurer in terms of the dread disease benefit on the policy.

The claim was rejected on the basis that cover for very-early-stage prostate cancer is specifically excluded under the cancer benefit.

Mr J was shocked to learn of this exclusion. He claimed that he had never been advised of such an exclusion when the policy was sold to him via telephone.

On referral of the complaint to the insurer, the insurer pointed out that Mr J had been provided with the full documents pertaining to his cover within 14 days of the call.

The ombud wrote back to the insurer, saying: “Based on the telesales recording submitted to our office, there is no evidence that it was in fact discussed with the complainant that early-detected prostate cancer would not be covered under the policy.” When the insurer made no attempt to resolve the complaint, the ombud took the case under investigation.

The main case of the insurer was that Mr J had been sent documents that adequately explained the scope of cover. It stated that it would be impossible for it to know for what conditions a client may claim for and, therefore, impossible to provide specific explanations on those conditions. “For that reason, clients are provided with all relevant terms and conditions to read carefully and store in a safe place,” the insurer argued.

The ombud recommended that the insurer settle the complaint. It did so, paying the full amount of the benefit: R200000.

Mr S and CGT

The complainant, Mr S, was a 66-year-old retired quantity surveyor who had owned his own business. In July 2015, he met a representative of a financial product provider and asked that his funds be moved into more cautious, low-return investments, specifically to avoid losses. He also asked that all costs be disclosed.

The adviser recommended that the amount be split between funds. He disclosed his fees and Mr S agreed to the transaction.

Mr S subsequently got a shock to see that R299958 had been deducted for capital gains tax as a result of the transaction.

He complained that he had not been advised of the tax implications of the transaction and argued that he would have never agreed to the transaction had he known.

To meet the tax bill, Mr S had had to sell a property because he could not afford to pay it from his retirement savings. That disposal also attracted capital gains tax.

Following intervention by the ombud, the financial institution made an offer to settle, which was accepted by Mr S.

PERSONAL FINANCE