The FSCA is proposing to increase the FAIS Ombud’s compensation limit from R800 000 to R3.5 million.
In a communication published this week, the FSCA said the proposal is the result of a recommendation in a report by the World Bank Group (WBG). National Treasury commissioned the WBG to review South Africa’s financial ombud system.
The report, “South Africa – Financial Ombud System Diagnostic”, which was published last year, recommended reforms to enhance customer protection and good-quality outcomes in the financial services sector.
One of the recommendations was that the current maximum compensation limit for the FAIS Ombud, which was set in 2004 at R800 000, should be reviewed. The limit is no longer appropriate, because it has not kept up with inflation or the financial realities in the market. It is also “out of kilter” compared to other ombuds in the financial sector.
“Considering factors such as the market realities of consumers’ risk exposure and the fact that a very low financial limit for awards to complainants jeopardises the restitution outcome of determinations, the proposal is to increase the jurisdictional limit to R3.5m,” the FSCA said.
If the proposed amendment is adopted, sub-section 4(c) of the Rules on Proceedings of the Office of the Ombud for Financial Services Providers will read: “The complaint must not constitute a monetary claim in excess of R3 500 000 for a particular kind of financial prejudice or damage, unless the respondent has agreed in writing to this limitation being exceeded, or the complainant has abandoned the amount in excess of R3 500 000.”
Comments on the proposed amendment must be emailed to FSCA.RFDstandards@fsca.co.za by 19 August.
To download the proposed amendment and the comments template, go to www.fsca.co.za > Regulatory framework > Documents for consultation > FAIS > Documents for consultation.
For more information, email Hannelie.hattingh@fsca.co.za at the FSCA’s Regulatory Framework Department.
Its about time. Great recommendation