No ROA, No Defence: A Costly Reminder for Every Financial Advisor.

Imagine this. Your client suffers a devastating loss, their insurance claim is denied, and suddenly you are in the hot seat, not because you gave the wrong advice, but because you can’t prove what advice you gave.

This isn’t fiction. It’s exactly what happened in a recent case reported by the FAIS Ombud. It serves as a powerful reminder that in the world of financial services, a Record of Advice (ROA) isn’t just compliance paperwork. It’s your lifeline.

💎 The Case: High Value Jewellery, High Stakes Oversight

In 2022, a client insured his wife’s jewellery, a tennis bracelet and diamond earrings valued at R785,000, under an all-risk short-term insurance policy. During an international flight, the jewellery was placed in a bag in the overhead locker. By the time they reached their hotel, it was gone.

The insurer rejected the claim.

Why? The policy had a specific condition. Jewellery over R150,000 must be stored in a locked safe when not worn. Because this wasn’t followed, the insurer offered a goodwill payment of R135,000, which the client accepted.

But the story didn’t end there. The client lodged a complaint against the advisor, claiming he was never properly informed of the warranty requirement. He assumed “all-risk” meant “covered no matter what”.

The advisor insisted the terms were explained and pointed to the policy documents and emails sent.

But there was one critical problem:
🛑 He couldn’t produce a Record of Advice.

⚖️ What the FAIS Ombud Said

While the Ombud found that the warranty was disclosed in the policy documents, the advisor’s inability to produce a ROA was a serious compliance failure.

In terms of the General Code of Conduct, FSPs are required to:

• Keep a Record of Advice (Section 9)

• Ensure records are accurate, complete, and retrievable (Section 3(2)(a))

Due to the advisor’s failure to produce this key document, the Ombud recommended a settlement of R50,000. Both parties accepted this recommendation.

🧠 Key Lessons for Advisors and FSPs

This case highlights some vital truths:

Advice without documentation is as good as no advice at all.
You might have explained every detail, but if it’s not on record, you’re vulnerable.

Policy documents are not enough.
The law requires evidence that the advice was provided and understood, not just that the client received a policy schedule.

“All-risk” doesn’t mean “no conditions.”
Clients often misunderstand policy terms. It’s your job to clarify and record that you did.

🛡️ The ROA: Your Compliance Safety Net

The Record of Advice is more than a formality. It’s:

• Proof that suitable advice was given

• Evidence that risks and exclusions were explained

• Your defence in the event of a complaint

If you can’t find it, you can’t use it. And no, “system migrations” aren’t an excuse.

Make Compliance Work for You

At FSPComply, we help businesses set up reliable, FSCA-aligned compliance to ensure:

• Proper advice is given

• Records are stored securely and accessibly

• And when it matters most, you’re protected

📌 Whether you’re an independent advisor or a growing FSP, let’s make sure your compliance doesn’t just tick the boxes. It protects your business.

📩 Reach out to us today to avoid costly mistakes down the line.