Bridging finance scrutinised

Cape Town - Financial advisers and intermediaries who market bridging finance to clients and believe that the Financial Advisory and Intermediary Services Act (the Fais act) does not apply to them, need to reconsider.

Fais ombudsman Charles Pillai recently stated that a financial adviser should repay his client any monies invested on his advice in a bridging finance scheme.

This is the third time that the Fais ombudsman has had to handle a complaint about financial adviser Willie Adriaan Jordaan, previously of East London.

Jordaan also previously advised various clients of his to invest in the now-defunct Fidentia.

The complaints relate to financial advice that Jordaan gave clients while he was working for Sanlam in East London, from which he was subsequently fired.

The most recent complaint refers to his recommendation that a client invest in the Auctum Capital bridging finance scheme. Auctum Capital then collapsed and the client, Wilhelm Julius Malan from East London, lost R110 000, as well as the interest that had been reinvested.

According to Pillai, Jordaan's defence is that bridging finance is not defined as a financial product by the Fais act. Pillai says that although bridging finance is not defined as a product in the act, things are not that simple.

Bridging finance in this case is money paid to estate agents for their commission before transfer of the property, but minus the discount. As soon as the full commission fee has been paid over, the bridging financiers get their money back, plus the profit which is shared.

- Sake24.com

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