CR99

Investment instruction not carried out – monies invested in second hand endowment policy – loss of capital

Background

In May 2000 the complainant, acting through a brokerage which is a member of our scheme, instructed a bank to invest an amount of R93 104 on her behalf and to arrange that the interest be paid monthly into her savings account. When she discovered, after three months, that no such interest payments had been made she made enquiries and was advised that her money had been invested in a 5 year endowment policy. Since she needed some money the insurer withdrew an amount of R2 850 from her investment account. For the ensuing years she received annual reports from the insurance company and in March 2005 she was notified that the endowment policy would pay out an amount of approximately R74 000 on 1 June 2005. Since she was already 84 years old and required her interest for living expenses she requested our office for assistance.

Discussion

Following our request to the brokerage to investigate the matter the brokerage readily agreed that the investment as made on behalf of the complainant, who at that time was 79 years of age, was not a suitable investment. The brokerage therefore proposed to refund to the client her original capital plus interest at money market rates less the income of R2 850 that she had received.

Result

The brokerage offered that a total amount of R147 382 be repaid to the complainant which offer she accepted.

AS
October 2005