Not having understood the difference between a short-term commercial insurance policy and an individual policy with professional use for a vehicle, a financial consultancy firm was found in the United States. ;Hot water.

The ombudsman for financial service providers, Naresh Tulsie, has spoken out against Central Financial Advisors, which operates under the name of Coler Financial Services Providers in Bloemfontein, for having "acted negligently" after the "financial services provider". an insurance claim presented by Bongani Nxumalo had been denied following the theft of his courier vehicle.

The ombudsman concluded that Coler had "breached the contract he had with Nxumalo and the requirements of the general code of conduct of the Financial Services and Intermediate Services Act".

The company was ordered to pay nearly 145,000 rand to Nxumalo to cover the loss of its vehicle.

Nxumalo, who was an independent mailer, purchased a Toyota Hilux vehicle with the intention of using it for mail and having it fitted with a bulk or mail canopy. He asked Coler Financial Services Providers to help him purchase insurance for his vehicle.

Two years later, his vehicle was stolen and his claim was rejected by the insurance company Renasa because he was insured under a personal lines insurance policy and the use of the vehicle was captured at commercial purposes.

Nxumalo complained to the ombudsman's office about telling his financial advisor that the vehicle would be used for courier work. In contrast, Coler Financial Services claims to have not been informed of the need for a commercial insurance policy.

"It is evident that Coler Financial Services had no understanding or appreciation of the insurer's product offerings, let alone the appropriate option to the needs and circumstances of the plaintiff," he said. Tulsie in the decision.

Coler Financial Services has not complied with the provisions of the general code of conduct, which requires advisors to obtain all relevant and available information from a potential client in order to carry out an analysis and recommend a suitable product for their needs.

If Coler Financial Services had performed the needs analysis, it would have been able to recommend to Nxumalo a policy regarding commercial lines, given the purpose for which the vehicle would be used. Instead, Coler Financial Services preferred to place the Nxumalo vehicle in a personal line font with the use class specified as a business use.

As a layperson, Nxumalo was simply required to answer a question as to whether the vehicle would be used for private or business purposes and Coler Financial Services did not understand and appreciate his situation.

The Ombud added that Coler Financial Services had also failed to keep a record of advice stating that a needs analysis had been performed and the reason a product had been recommended.

Documents such as a needs analysis and a list of tips are essential in determining whether a supplier not only complies with the code, but has discharged its obligation to the customer, has made notice Tulsie.

In its defense, Coler Financial Services claimed to have conducted a needs analysis, but when drafting the national proposal form, only two options for private and commercial use were provided. There was no official section to choose a commercial use as an option, he said.

However, Tulsie stated in the decision that "in proceeding with the proposal, although there is no option to meet Nxumalo's needs, the Counselor acted negligently and that the damages he suffered were not only predictable but inevitable ".

There was no doubt that counsel failed to demonstrate that he had assessed the complainant's financial needs and that he adequately counseled him on the appropriate police coverage to meet his needs. the reasons for the harm suffered by Nxumalo, concluded Tulsie.

The decisions of the ombudsman result in a civil judgment.