Old Mutual Rep Accused of Lack of Honesty

September 28 - Old Mutual Life Assurance was ordered by Fais Ombud, Charles Pillai to pay a pensioner for losses suffered resulting from inappropriate financial advice in 2006.

The 93 year old Harmanus Gerhardus Ramam of Pretoria was convinced by Old Mutual agent, Ernie Lotterng to withdraw his life savings from his Standard Bank account and transfer it to Old Mutual's Dynamic Floor fund.

The amount of R560,000 was thus invested in Old Mutual's fund, with Lottering promising that this would be Raman's "best investment ever with a 90% guarantee on capital and guaranteed income of R5,000 per month."

Raman eventually took the case to the ombudsman on the basis that he had not understood that only around R500,000 of the money was guaranteed.

He also claimed that he did not realize that he was meant to pay commission fees of over R18K.

Raman, who relied on the investment returns to live on, started to see his money dwindling, which led him to decide to transfer his investment back to Standard Bank.

According to Lottering, Raman and his son who were present at the time that the product was explained to them, seemed to understand what was being said. "It is noted that neither Mr. Raman, nor his son, raised any concerns during the meeting regarding the risk profile or workings of the product, thereby indicating that the investment vehicle was understood and accepted," said the Deputy Internal Arbiter at Old Mutual, Charles Milne.

"Having considered the documentation presented, it is our respectful view that there is insufficient evidence of any negligence or misrepresentation on the part of the Old Mutual Financial Adviser."

Pillai, however, did not agree with Old Mutual's claims and found in fact that several document had been altered to "suit the evidence."

"This attempt to deceive on Lottering's part is indicative of lack of honesty and integrity," wrote the ombud in his report.

Old Mutual was ordered to repay the pensioner R40,359 plus interest which he would have earned if he had remained an account holder at Standard Bank.