FSB Press Release

FSB WELCOMES SA TAXI JUDGEMENT

09 October 2014: The Financial Services Board (FSB) welcomes the recent judgement by the Supreme Court of Appeal that ruled against SA Taxi Securitisation Pty Ltd (SA Taxi), which was deemed to have obliged taxi owners who financed vehicles through SA Taxi to use specific brokers when purchasing insurance.

Jonathan Dixon, Deputy Executive Officer: Insurance at the FSB, says the ruling by the court supports the regulator’s approach to seek to ensure freedom of choice for all consumers when choosing financial services products. “We are pleased with this ruling. The FSB first investigated this matter in June 2010 as we were concerned that the lack of choice being provided to taxi owners hampered their own interests.”

The taxi owners who brought the case, claimed that SA Taxi forced them to use brokers from SA Taxi Finance Holdings (Taxi Finance) when purchasing insurance, which deprived them of the right to choose their own brokers and find competitive rates.At the end of 2013 the FSB brokered a voluntarily agreement from SA Taxi to allow for freedom of insurance provider and broker.

The court ruled that SA Taxi refused to agree to the substitution of taxi risk by the taxi owner’s broker, maintaining that as the cessionary of the respective insurance policies, it had the right to appoint a broker of its choice, to manage the policy for the duration of the finance agreements.

The taxi owners had signed an insurance policy for a duration of two years; yet were tied into ceding the choice of insurance broker to SA Taxi for the full duration of the financial agreement of 60 months. The ruling found that the parties never intended to cede the right to appoint a broker to manage the policy for its duration.

“The FSB is focused on ensuring that all financial intermediary services are appropriate, affordable and fair. This is the main principle behind the upcoming Retail Distribution Review (RDR) regulation that aims to ensure insurance distribution models are aligned to Treating Customers Fairly (TCF) outcomes,” says Dixon.

“We are very pleased that this case has now been resolved and that taxi owners who choose to finance their vehicles through SA Taxi will in the future now be able to choose which insurance broker they use, giving them the right to source the most appropriate deal for their needs,” concludes Dixon.

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Enquiries:Ms Tembisa Marele
Communications Specialist
Financial Services Board

Email address:

Telephone: 012 428 8025

083 754 2052