Impact Financial Consultants CC and Another v Bam NO and Others

Impact Financial Consultants CC and its principal, Mr Michal Johannes Calitz, rendered financial advice to a number of clients (the third to twentieth respondents) recommending investment in the MAT Relative Value Arbitrage Fund, later known as the Relative Value Arbitrage Fund Trust (RVAF Trust), which was managed by Abante Capital (Pty) Ltd. Following the collapse and liquidation of Abante Capital and the RVAF Trust after the suicide of its principal, Mr Herman Pretorius, the investors suffered substantial losses. They lodged complaints with the Ombud for Financial Services under the Financial Advisory and Intermediary Services Act 37 of 2002 (FAIS Act), alleging negligent breach of statutory duties under the FAIS Act and the General Code of Conduct. The Ombud upheld the complaints, found Mr Calitz and Impact Consultants negligent, and awarded compensation. Applications for leave to appeal to the Financial Services Appeal Board were refused. A review application to the Gauteng Division of the High Court was dismissed, leading to an appeal to the Supreme Court of Appeal.

Leave to appeal was granted. The appeal was upheld. The High Court’s order was set aside and replaced with an order setting aside the Ombud’s determinations and the refusal of leave to appeal. The complaints were remitted to the Ombud for reconsideration in accordance with the FAIS Act. The Ombud was ordered to pay the costs of the application and the appeal.

The case is significant for clarifying that the Ombud for Financial Services must first establish the jurisdictional facts, including the precise nature of the financial product, before determining complaints and awarding compensation under the FAIS Act. It reinforces principles of administrative law in the financial regulatory context and rejects an approach that treats statutory breach as giving rise to automatic liability without proper consideration of causation.