The Office of the FAIS Ombud (“OFO”) released its Annual Report for the year 2018/2019 last week, providing a review of its performance over this period.
During the financial year the OFO received a total of 9323 new complaints. The report indicates that there was an increase in the number of complaints settled or resolved in favour of the complainant, as it rose from 1392 during 2017/2018 to 1871, an increase of 34%. In analysis of the complaints, certain trends are highlighted:
The emergence of Fintech and the provision of financial services via online platforms, commonly referred to as robo-advice, has resulted in complaints received from consumers dissatisfied with the solutions provided. In many cases these solutions, which they assumed provided specific benefits and cover, fell short of their expectations and was only revealed to them when a claim arose.
It is important to note that regardless of whether the transaction was concluded solely by the complainant via an online platform, or whether utilised in conjunction with a FSP, there is still a requirement that any robo-advice solutions conform to the provisions of the General Code of Conduct and that the required disclosures be made to ensure that the prospective client is placed in a position to make an informed decision as to whether the specific solution meets his/her financial needs and circumstances.
2. Forex Investments
The report shows that there has been an increase in forex investment complaints, where consumers of financial services are lured by the prospects of making what is purported to be quick and easy profits. Whether this is as a result of the current economic climate or as a result of more and more individuals having access to the various social media platforms, there would appear to be a growing trend of individuals investing in forex platforms after having been enticed by social media posts on, for example, Facebook and Twitter. These, more often than not, turn out to be scams and the funds are ultimately lost.
3. Banking complaints
A trend that has been identified is complaints surrounding the failure by banks to provide assistance to clients who are the victims of fraud. In many instances the banking institutions remain of the view that should any alleged fraudulent act occur as a result of the complainant’s personal details being compromised instead of their safeguards having been breached then they are not liable for any losses incurred. The OFO has however approached these institutions in a number of matters, where it has been requested that in the interests of treating customers fairly they utilise their significant resources to at least provide assistance to their clients that may assist in any further investigations that will see the complainant receive justice.
4. Crypto-currency complaints
The OFO is starting to receive, on an increasing basis, complaints related to investments into such currencies, primarily Bitcoin, where these currencies are being marketed as mainstream investment solutions, and in some instances the performance is even guaranteed.
5. Replacement Policies
There has also been an increase in complaints surrounding the replacement of existing policies, specifically long- and short term insurance policies. Although it may be systemic of the economic climate, the OFO has noted that more and more policies are being replaced in favour of a more affordable policy, which may provide temporary relief on a monthly basis, but often comes with reduced benefits or higher excesses that are often only discovered in the event of a claim. This is unlikely to happen where the laid down procedure for replacements are followed. Should an adviser be unable to prove that he or she had followed the required steps to enable the client to make an informed decision, it could have serious financial repercussions for such an adviser.
Click here to download the detail of these trends.
The Annual report also highlights several determinations and settlements. Some of these will be discussed in more detail in future editions of the newsletter.