Beware investment advisers' promises
A THOHOYANDOU man must wait for a Financial Advisory and Intermediary and Services (FAIS) ombudsman's determination to know the fate of his R1 million investment.
Richard Netshisaulu, 56, regrets ever listening to his financial adviser, Breteus Koetzer, who recommended that he move his money to a Sharemax investment.
Netshisaulu, of Mutale village in Thohoyandou, says he had his his R1million safely invested with Standard Bank and Liberty Life when Koetzer assured him that there were no risks involved in moving his money to Sharemax.
Netshisaulu says Koetzer has been his financial adviser for many years.
"I did not doubt his advice since he had previously helped draft my will, which Standard Bank has kept.
"He actually helped me withdraw my money before he invested it in Sharemax," says Netshisaulu.
Sharemax, a real estate property investment company, engages in renting, operating and managing shops and offices. It now operates as a subsidiary of Realcor Holdings.
Netshisaulu says the investment was for two years but he got the shock of his life when he received a letter notifying him that he had to wait for a further six years since Sharemax had been taken over by another company.
He says Koetzer worked for Standard Bank and he believes the bank should be held liable for the incorrect "expert" advice its employee gave him to his detriment.
Kershia Singh, a media relations officer at Standard Bank, says the the bank was aware of the matter.
"This issue is currently before the FAIS ombud. As such, Standard Bank is not in a position to comment until the process has run its course," she says.
A week ago FAIS ombudsman Noluntu Bam ordered D Risk Insurance Consultants and Deeb Raymond Risk to refund Lionel and Catherine Walters' R300000 after giving their clients wrong investment advice.
They, too, were advised to invest their money with Sharemax in The Villa, a public property syndicate.
At the time the pensioners were largely reliant on income from their investment to support themselves.
A monthly income was paid until July 2010, when it stopped.
They later received news that Sharemax was experiencing cash flow problems and the monthly payments would not be made.
"Considering our risk profile, the advice we were given was clearly not a product of due skill, care and diligence. The advice was neither fair, honest nor appropriate," the pensioners said.
Bam has brought a smile to their faces.
She ordered D Risk Insurance Consultants and Deeb Raymond Risk to refund their R300,000 plus interest before the end of July.
She said D Risk had failed to disclose the material aspect of risk in the Sharemax The Villa investment.
The consultants failed to act with due skill and diligence in the interest of their clients and with the integrity demanded by the code of the financial service industry.
- It is essential for consumers to invest money with reputable and long-standing financial institutions so that in the event of problems consumers will not lose their money.
For example, two months ago Bam ordered Standard Bank to give a refund to a consumer who had been defrauded by an employee of the bank.
Nelson Tshitema of Mapetla, Soweto, was defrauded of R400,000 under the pretext that his nest egg was being moved to a better performing investment.
Tshitema said the problem started after he received a phone call from a financial adviser from the bank five years ago.
The bank employee, Lazarus Mocwiri, and a Liberty Life financial consultant, Sipho Dlamini, invited Tshitema to Standard Bank's Smal Street branch in Johannesburg, and advised him to move his money to another investment.
He says he valued their expertise because he had previously dealt with them, so he took their advice.
"I agreed because I trusted the two gentlemen from the bank. I had a debit order for R25,000 to Unit Trust-Stanlib .
"They suggested that I cancel it and invest the money with Liberty Life for five years.
"They also advised me to invest R600,000 with Discovery Life for five years and R400,000 in gold shares for a year," Tshitema says.
Given that the Standard Bank employee had asked him to go to the branch to discuss the matter, Tshitema believed it was an investment product of Standard Bank.
Also, the fact that Mocwiri was employed by Standard Bank gave Tshitema the impression that he was acting on behalf of the bank.
Unbeknown to Tshitema he became a victim of a fraudulent scheme devised by an employee of the bank.
Tshitema became concerned when he realised he was not getting any information from the bank about his Growth Coin investment.
It later transpired that Tshitema's money was invested in a company belonging to Mocwiri and Dlamini and that all his money had been used.
Bam has now also brought a smile to this investor's face.
She has ordered Standard Bank to refund Tshitema the R400,000, with interest, that was fraudulently transferred to Mocwiri's account.
In determining Tshitema's case, Bam said Standard Bank had failed to put in place adequate systems to prevent fraud.