In recent months the financial services ombud has received a lot of coverage for the work they do in protecting the rights of investors who have been mislead by financial advisors and in particular cases that involve unlisted shares.

The promise of huge returns when a company lists on the stock exchange is often hard for many to resist when accompanied by a well presented plan by a persuasive financial advisor or consultant. Financial advisers are required to do their own due dilligence when offering unlisted shares for sale to investors and to fully inform them of the risks associated with such investments. The most common risk and one that every investor should be aware of is the possibility that the company will not list. There are numerous examples of listings which failed to materialize including Garek, Ubambo and Platfields.

There are many reasons why a company might not list and those would include non-compliance with the JSE listing requirements, a changed operating environment or any number of other reasons and then of course you are stuck with shares in a company which are not trading or changing hands frequently or at a reasonable price. The problem is that the price of the shares is not determined by market forces but by the ability of the financial adviser to sell. We need to remember that financial advisers are sales people and have often undergone some of the best sales training available.

The financial services Ombud has made many rulings against financial advisers who were either not registered as a financial adviser or who failed to inform investors of the risks associated with the investments. It is an advisers responsibility to take the investors personal circumstances into account before advising an investor.

If you believe that you have been incorrectly advised or that your advisor simply sold you down the river, contact the financial services ombud.

FAIS OMBUD Contact Details
Telephone: +27 12 470 9080
Facsimile: +27 12 348 3447
E-mail Address: