Secondary

FAIS Ombud Determinations Toothless?

Enforcement of the FAIS Ombud’s determinations appears to be a problem, particularly from a consumer perspective. What recourse do consumers have when those ordered to make good, elect to ignore the instruction?

An article by Julius Cobbett on Moneyweb revealed that consumers are by and large left to their own devices after having obtained a ruling in their favour. Read the article Rogue broker ignores FAIS Ombud here.

It is important to note the time involved, too.

In October 2008, investments were made in two ill-fated schemes. In November 2010, the Ombud found for the complainants, and ordered the respondent to repay R660 000 plus interest from the date of investment.

According to the article, the respondent chose to ignore this order. A determination from the Ombud has the same legal standing as an order from the high court, thus ignoring it should be viewed in a serious light.

Cobbett took up the matter with the Office of the Ombud:

The Ombud’s office does not keep records of whether rulings are complied with. Once a determination is obtained, it is up to the complainant to enforce it.

A Fais Ombud spokesperson comments: “The complainant will have to approach an attorney to assist him with the execution of the judgement. Once a determination is filed in court, we are not at liberty to get involved any further.”

The client did seek legal help, “…but so far he has only incurred further expense and has made little progress in enforcing the Ombud’s determination.”

Essentially, it took the client two years to get justice, but four years after investing, the matter is still unresolved.

Many people who choose the Ombud route are in dire straits, and without the means to obtain legal aid. As in so many other instances, it seems that a lot of sideshows are making money, at the expense of the deserving. Liquidators and lawyers are often the biggest beneficiaries from the misfortunes of others.

The article refers to the possibility of the advisor having PI cover. This only became compulsory late in 2010, and not too many FSPs saw the necessity for such cover before then. Thus, those clients who invested before then, will be unable to benefit from this insurance.

The saying, “Justice delayed is justice denied”, is often used with reference to the accused.

In this case, it is the victim who suffers.

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