The appointment of Leanne Jackson from 1 November as the Chief Ombud of the Ombud Council is a major step in addressing the challenges that have haunted most informal dispute resolution mechanisms for many years.
According to National Treasury’s media release, the Ombud Council was established with the objective of ensuring that “financial customers have access to, and are able to use affordable, effective, independent, and fair alternative dispute resolution processes for complaints about financial institutions in relation to financial products, financial services, and services provided by financial infrastructures”.
For this purpose, the Ombud Council will have supervisory jurisdiction over the legally established ombuds (the Pension Funds Adjudicator and the FAIS Ombud) and the voluntary industry guardians, including the Short- and Long-term Insurance ombuds, and the Credit, Banking and JSE ombuds.
“As the Chief Ombud, Ms Jackson is mandated to establish and operationalise the office of the Ombud Council and implement the functions set out in Chapter 14 of the FSR Act. She is required to act to the benefit and in the interests of the South African public and of the Ombud Council, and to avoid any conflict between her interests and the interests of the Ombud Council,” Treasury said.
“Ms Jackson is an independent financial regulation consultant with extensive experience in financial sector policy and regulation in both the public and private sectors. She has been closely involved in the development and implementation of key features of the South African financial sector legislative framework such as the Treating Customers Fairly consumer protection framework, the Retail Distribution Review and all related publications contributed to the drafting of the Regulatory Strategy of the FSCA. She has contributed to various key financial sector legislative developments, including drafting the Conduct of Financial Institutions Bill, the FSR Act, the Insurance Act and Policy Protection Rules, aspects of the Financial Advisory and Intermediary Services Act, the Draft Banking Standards and numerous other instruments.”
New FAIS Ombud
The recent announcement of Advocate John Simpson as the new FAIS Ombud after nearly three years without a full-time incumbent is equally welcome.
Like Jackson, Simpson brings to the table a wealth of practical experience, which was certainly lacking in some of the previous incumbents. Before this appointment, he served as a magistrate, a general manager at the Ombudsman for Banking Services, a legal consultant and recently a full-time member at the National Consumer Tribunal.
Simpson certainly faces a challenge, given some of the problems experienced by the office over the past few years. We wish him all the best.
Functions of the Ombud Council
According to its website, the Ombud Council does not handle customer complaints itself, but oversees all financial sector ombud schemes, in essence operating as the regulatory authority for ombuds.
The Ombud Council will assist complainants with identifying which ombud is responsible for hearing their complaint in cases where the jurisdiction is unclear.
The Financial Sector Regulation Act sets the following objectives for the Ombud Council:
- Recognise industry ombud schemes;
- Promote co-operation between, and co-ordination of, the activities of ombuds schemes;
- Strive to protect the independence and impartiality of ombuds schemes;
- Promote public awareness of ombud schemes and the services they provide;
- Facilitate access by financial customers to appropriate ombuds schemes;
- Publicise the kinds of complaints that different ombud schemes deal with;
- Resolve overlaps of the jurisdictional coverage of different ombud schemes; and
- Monitor the performance of ombud schemes, including compliance with the requirements of the chapter and specific financial sector laws.
Practical challenges
From an industry perspective, one of the biggest challenges will be to address objectivity and impartiality perceptions in the financial services industry that emerged in several Financial Services Tribunal findings.
From the last annual report published by the FAIS Ombud, it seemed that creating public awareness of its existence was a bigger priority than complying with its vision of being an independent, effective and trusted alternative dispute resolution office for complaints regarding the provision of financial services and the office’s mission of promoting consumer protection and enhancing the integrity of the financial services industry by the fair and expeditious resolution of complaints.
Similarly, providing a centralised complaints portal will assist greatly in improving productivity at the various offices. The FAIS Ombud, for instance, received 10 552 complaints in 2020/21, of which 4 245 were dismissed and 2 877 were referred to other forums – that is more than 67% of the complaints received.
Ombud Council’s mission
Other goals set out in the Ombud Council’s mission are:
- Setting enhanced governance and accountability requirements for ombud schemes;
- Harmonising and strengthening standards of practice for each ombud scheme through rule-making and oversight powers; and
- Developing a uniform and consistent framework for alternative dispute mechanisms across the financial services sector.
We wish Ms Jackson all the best in this challenging position. She has proven herself in the past, and her wealth of experience in both the industry and on the legislative side will certainly stand her in good stead.
