It is anticipated that the Financial Sector Regulation Act of 2015 will become effective next year. Much emphasis will be placed on how you manage complaints. It will be an important barometer of your commitment to treating customers fairly.
Alan Holton, an associate of Moonstone Compliance, kindly provided the following insight into what we can expect.
In terms of Schedule 4 to the Bill (Laws Repealed or Amended) the definitions of “complainant” and “complaint” in the Financial Advisory and Intermediary Services Act 2002 will be amended. The current definitions are:
|“complainant” means, subject to section 26 (1) (a) (ii), a specific client who submits a complaint to the Ombud;|
|“complaint” means, subject to section 26(1)(a)(iii), a specific complaint relating to a financial service rendered by a financial services provider or representative to the complainant on or after the date of commencement of this Act, and in which complaint it is alleged that the provider or representative –|
|(a)||has contravened or failed to comply with a provision of this Act and that as a result thereof the complainant has suffered or is likely to suffer financial prejudice or damage;|
|(b)||has wilfully or negligently rendered a financial service to the complainant which has caused prejudice or damage to the complainant or which is likely to result in such prejudice or damage; or|
|(c)||has treated the complainant unfairly;|
In the proposed amendments to the FAIS Act, these terms will have the following meaning:
|“complainant” means a specific client who submits a complaint to a financial services provider;|
|“complaint” means an expression of dissatisfaction submitted by a complainant, relating to a financial service offered or rendered by a financial services provider or representative to the complainant on or after the date of commencement of this Act, or to an agreement with the financial services provider or representative in respect of its services and indicating that–|
|(a)||the provider or representative has contravened or failed to comply with a provision of this Act or an agreement;|
|(b)||the provider’s or representative’s maladministration or wilful or negligent action or failure to act has caused the complainant harm, prejudice, distress or substantial inconvenience; or|
|(c)||the provider or representative has treated the complainant unfairly;|
Note that the words “specific complaint” have been removed from the definition and that all that is now required for a matter to be considered a complaint is that there must be an expression of dissatisfaction relating to a financial service or to an agreement regarding the three possible types of complaints (i.e. contraventions, maladministration or unfair treatment). It is no longer necessary to show any form of financial prejudice, but merely an expression of dissatisfaction. Also, for any complaint to qualify as such currently, it must have been reported to the Ombud. Once the definitions have been amended, any complaint to the provider will qualify as a complaint and will have to be dealt with on a formal basis.
We dealt with the background to the above in great detail last year. Please visit our website and type in “complaints management” in the search facility to view all.