Provident Fund Payout

I cashed out my Provident Fund when I left my previous employer, I was there for just under 2 years. I paid a higher tax as the first R25000.00 subject to the tax rule of: 18% of lump sum exceeding R25000.00
The financial services company explained that because several years ago I cashed out a portion of my provident fund historically, I don't qualify for the tax exclusion. Is this correct?

Yes, it's unfortunately correct, as SARS needs to take into account previous amounts you might have received as the exclusions are lifetime exclusions and not employer relevant.