CR205 Poor service – payment to incorrect party.


Poor service – payment to incorrect party.

On occasion a complainant who comes to our office has been treated so badly that it is quite astonishing.


In this particular case the complainant had worked for his employer as a pan lidder for 19 years and had then been retrenched. From the information that we had been sent it was clear that he had belonged to a provident fund at the time but had been advised by an intermediary to purchase an annuity in his own name with the full amount of his provident fund entitlement, as he had reached retirement age.

The complainant approached our office because he had not been receiving a benefit and he was not sure that he had in any event signed any documentation for the benefit.

On making enquiries with the insurer we were surprised that they took a rather casual approach to the matter. They advised us that the R79 000 which had been the complainant’s provident fund benefit had been transferred to a retirement annuity fund within the insurer and there had subsequently been a purchase of an annuity. A policy had also been purchased to guarantee the lump sum that had been invested originally in the event of the complainant’s death.

They advised that it had come to light that the income had been paid to the employer instead of the complainant.

On further enquiry the insurer advised us that the funds from the annuity had in fact been paid into the personal bank account of the Human Resources Manager of the employer at which the complainant had prior to his entrenchment been employed.

The insurer advised that they had contacted this individual who had confirmed that he had now made a pro-rata payment of R20 000 into the complainant’s account and that he was waiting for a statement from the insurer to confirm what was paid into his personal account before he made any further payments to the policyholder to take account of the shortfall.

We were amazed that the insurer took no responsibility for the fact that they had been paying the benefit to the wrong party and that they were not taking any steps to set the matter right themselves other than to pay future monies to the right party.

We insisted that the matter be set right by the insurer immediately and that it was up to them to make arrangements with the Human Resources Manager for any refunds if due.

We advised them that we saw the actions of the Human Resources Manager, over whom we had no jurisdiction, as highly irregular and that we expected the insurer to take further action in this respect.

We further advised that as the complainant had been out of pocket for a period of 41 months that he was entitled to interest on the annuities for this period.

We advised the complainant that he may wish to institute fraud charges against the Human Resources Manger who had not been entitled to the benefit.

During the negotiations the complainant suffered a stroke which complicated matters as he was no longer able to correspond with our office but he had appointed another party as his ‘correspondent’. The correspondent confirmed to us that in fact matters had been put right and the insurer had also paid the interest on the late payment of the annuity.


The documentation in terms of which the complainant had applied for an annuity was forwarded to the complainant’s correspondent as evidence that the complainant had in fact entered into the contract as he had been doubtful about this when he approached us.

November 2006