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Fraudulent employee and intermediary fined

Senior investigator, Johan Nel provides an update on a case previously reported on in Integrity where fraud took place within the Santam value chain.

If you've been swindled by a rogue insurance intermediary and you get caught up in a blame game between the intermediary and his or her employer, don't be fobbed off. They could both be held liable for your losses.

The Ombud for Financial Services Providers recently ordered a brokerage and its employee to repay a client who was defrauded of money collected by the intermediary, under the pretense that it was for policies with short- term' insurer Santam.

In this case, Mathys Johannes Marais, trading as Protea Makelaars, and his former staff member, Suzette Brickhill, have been ordered to pay R36 500 to David le Roux of Tzaneen, Limpopo.

During her investigation, Noluntu Bam, the Ombud for Financial Services Providers, discovered that Santam had carried out its own investigation into Marais and Brickhill. The insurer found that neither Marais nor Brickhill had a mandate to collect premiums on behalf

of Santam and that Brickhill had allegedly made use of fabricated tax invoices and policy schedules to deceive clients into thinking they were insured.

Santam opened a fraud case against Brickhill and reported the matter to the Registrar of Short-term Insurance. Consequently, the Registrar entered into a settlement agreement with Marais, whereby he paid an administrative penalty of R150 000 for various contraventions of the Financial Advisory and Intermediary Services (FAIS) Act.

Bam said that in response to the complaint to her office, Brickhill failed to address any of the allegations made against her and evaded all questions relating to fraud and theft. Instead, she accused Marais of not complying with the FAIS Act and accused Le Roux of instituting false insurance claims.

In his response to the complaint, Marais said that before he employed Brickhill in May 2008, she had eight years' experience working as a intermediary at a well-known bank. He asserted that he provided Brickhill with in- service training, audited her files and met with her every six to eight weeks.

He said that according to Santam's forensic investigation, Brickhill started committing fraud in January 2010. She would recruit new clients and then persuade them to pay annual premiums on their policies.

She gave clients false invoices on Protea Makelaars letterheads using Santam's VAT number and her own banking details. The clients paid the premiums into her personal account without their knowledge.

After Brickhill's dishonesty was uncovered, Marais dismissed her.

He said he should not be liable for Le Roux's loss because Protea never intended to deceive clients and did not benefit from Brickhill's actions. 

But in her determination, the Ombud found that Marais had failed to discharge his obligations to properly supervise Brickhill or to take reasonable steps to ensure that she complied with the FAIS code of conduct. 

"Unleashing the untrained, unsupervised and unregistered Brickhill on the public, Marais left her to her own devices. He did not even bother to register her with the Registrar," Bam said. 

Based on their "flagrant disregard of the law", Bam's order was against both Brickhill and Marais.