FAIS Ombud 2016/2017 Annual Report

How do the numbers contained in the Ombud’s latest report reflect on its mandate?

Complaints received for the period 1 April 2016 to 31 March 2017 came to 10 846, compared to 9 891 for the previous year.

• 3 794 (35%) complaints were dismissed.
• 4 639 (43%) complaints were referred to alternative forums.
• 592 (5.5%) were settled, a decrease from the 753 of the 2015/2016

The actual number of complaints handled by the Ombud came to 11 025. The graph below reflects how it was dealt with:

In other words, out of 11 025 complaints handled by the Ombud, only 1 073 (9.7%) were resolved in favour of the public. 47% were dismissed and 43% were referred elsewhere for resolution.

It is also interesting to note where those complaints that did not fall under the jurisdiction of the Ombud landed up.

In respect of the above, the Ombud notes:

“Lest our efforts are misinterpreted as inadequate because of the increased number of dismissals and referrals to other fora, we should look at the process that underpinned the 3 794 dismissed complaints and the 4 639 referred elsewhere.”

“The 3 794 complaints were dismissed after applying the legal rigour that the circumstances of each case warranted. To minimise the chance of dismissing a complaint in error, decisions to dismiss must be approved by senior managers and must be accompanied by submission of extensive supporting documentation. Similarly, if complainants are not satisfied with the decision to dismiss their complaint, they have the right to lodge an informal appeal for a review by a more senior person, who is likely to be an Assistant Ombud or Team Resolution Manager.”

“Dismissals and referrals to other fora are never done out of hand. Very often, we receive a complaint of one or two paragraphs that does not permit us to make a decision. In order to arrive at a position where we can make a decision about the complaint, we have to probe. Right from the first day of receiving the complaint at the case management division, we build an activity journal. An activity journal records personal details of complainants, their financial circumstances at the time of advice, the questions used to probe, and information given about the financial product. Once the case manager has built the story, the next stage involves an elucidation of the issues followed by application of the law. Only after completion of all these stages is a decision taken.”

“With regard to the 4 639 complaints that were referred to other fora, the decision to refer follows strict legal scrutiny and the decision of the case manager is subject to confirmation by a senior person. Where a decision is made to refer the complainant to court as provided for in the Rules on Proceedings of the FAIS Ombud (Rules), that decision is not appealable.”

The Annual report notes the following on the Ombud’s mandate under the heading “Legislative Mandates”:

a) FAIS Act

The main objective of the FAIS Ombud is to investigate and resolve complaints in terms of the FAIS Act and the Rules promulgated thereunder.

b) FSOS Act

A further function of the FAIS Ombud is to resolve complaints in terms of the Financial Services Ombud Schemes Act, (Act No. 37 of 2004) (FSOS Act), which is not covered by any of the other voluntary Ombud schemes or where there is uncertainty over jurisdiction.

Whilst it is admirable that the office of the Ombud goes to such lengths to ensure fairness, one has to ask whether an office, funded by levies from the industry, should spend the majority of its time and resources on complaints that should be handled by other forums.

Surely a central complaints facility for the financial services industry to refer complaints to the right forum would lead to a substantial increase in the efficient handling of the 5 630 justiciable complaints received by the Ombud. This would also contribute to the Ombud’s stated intent of handling complaints in a “…procedurally fair, informal, economical and expeditious” manner.

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