Making financial consumers aware of their rights to fair treatment and redress if their interests are prejudiced because of misconduct will be a key focus area of the Ombud Council over the next five years.
The Council, which was established under the Financial Sector Regulation Act (FSRA), has tabled its first full five-year strategic plan, covering 2025 to 2030, in the National Assembly.
The main objective of the Council is to assist in ensuring that consumers can use affordable, effective, independent, and fair alternative dispute resolution processes for complaints about financial institutions. The Ombud Council does not handle complaints, but oversees all financial sector ombud schemes, in essence operating as the regulatory authority for ombuds.
The Ombud Council aims to build on recent achievements – such as the voluntary amalgamation of four industry ombud schemes – and drive reforms that enhance the system’s accessibility and effectiveness. To this end, the strategic plan identifies three core priorities that will guide the Council’s efforts from 2025 to 2030:
- Maintaining a well-governed and effective Ombud Council – ensuring that the Council operates efficiently and aligns with its legislative mandate while adapting to financial ombud system reforms.
- Promoting consumer awareness of the ombud system and enabling financial customers to understand and assert their rights to fair treatment and redress.
- Streamlining and reforming the ombud system. The third priority will involve using legislation to enhance the financial ombud system’s coherence and future direction. This includes recognising industry ombud schemes, resolving jurisdictional overlaps, and monitoring scheme performance to ensure compliance with financial sector laws.
The Council will particularly focus on promoting consumer awareness of the ombud system, “raising awareness of financial customers’ right to fair treatment and access to redress through an ombud if they are prejudiced by unfair financial provider practices”, wrote Eileen Meyer, the chairperson of the Council.
Meyer said it is important the public knows that access to an ombud is an automatic, free “add-on” when using licensed financial institutions. “This understanding will boost confidence in the financial sector, in the interests of customers and financial institutions alike.”
National Treasury-driven legislation and regulation is aimed at encouraging consumers and communities to make more effective use of the financial system. The Ombud Council must be in a position to assist the ombud system to respond, so that a more inclusive financial sector is underpinned by appropriate dispute-resolution structures, Meyer said.
Three of the Council’s five strategic priorities for the next five years are focused on consumers.
1. Creating consumer awareness of ombud schemes
The Council will prioritise increasing consumer awareness and usage of ombud schemes, recognising that informed customers are better equipped to seek redress. The plan states that the Council will “prioritise the development of materials to increase consumer awareness of their rights to fair treatment by financial institutions and to assert these rights through accessing the financial ombud system”. This will involve collaboration with stakeholders such as the FSCA and the National Credit Regulator to develop educational resources and conduct outreach.
2.Identification of conduct risks
The plan states that the ombud system is a valuable source of data to assist policymakers and regulators to identify and respond to emerging financial sector conduct risks – that is, the conduct of financial institutions that gives rise to customer complaints.
The Council plans to harness this potential. It will analyse reported information from the ombud schemes to identify conduct risks and will engage with National Treasury and stakeholders to identify regulatory and policy responses.
The Council will use its “legislative toolkit” – such as its Rules on how to deal with complaints, its information-gathering powers, and the power to designate schemes to deal with complaints where there are jurisdictional gaps – to support such interventions, where appropriate.
3.Alignment of complaint-handling processes
The Ombud Council has been instrumental in transforming the ombud system. It facilitated the amalgamation of four industry ombud schemes into the National Financial Ombud Scheme (NFO), which was recognised by the Council in March 2024. This merger unified the Credit Ombud, the Ombudsman for Long-term Insurance, the Ombudsman for Short-term Insurance, and the Ombudsman for Banking Services Ombud into a single entity, streamlining access for financial customers.
The next phase of National Treasury’s plan to reform the ombud system is the creation of a new NFO, which will build on the current NFO by incorporating the FAIS Ombud, covering all regulated financial institutions, products, and services, but excluding retirement funds in the medium term.
Although several aspects of the reform of the ombud system require new primary legislation, the Council has used its legislative toolkit to improve alignment and co-ordination across the ombud schemes’ complaint-handling processes.
“Further streamlining of processes within the existing ombud system will minimise the potential disruption of implementing the structural changes to be made when reform legislation is ready – particularly the absorption of the FAIS Ombud into an overarching scheme.”
The Ombud Council will therefore focus on facilitating the simplification of the existing system, including simplified customer access points, reducing overlaps, simplifying referrals between schemes, and aligning terminology and complaint-handling processes across schemes wherever sensible.
The Council will also use its powers under the FSRA to make Ombud Council Rules governing complaint-handling processes for the Pension Funds Adjudicator, ensuring that these Rules are aligned to the extent appropriate with corresponding Rules for the FAIS Ombud and the NFO’s governing Rules.
4.Supporting reforms to create NFO 2
Another strategic outcome is to continue to support the reforms to the financial ombud system, as proposed in National Treasury’s policy statement, A Simpler, Stronger Financial Sector Ombud System (February 2024). This policy, informed by the 2021 World Bank Diagnostic, advocates for the creation of a consolidated NFO (NFO 2) to replace the existing ombud schemes, aiming for greater independence, efficiency, and accessibility.
The Council will provide technical expertise to shape the statutory framework for NFO 2. This involves participation in a legislative working group with National Treasury, the World Bank, the FSCA, and other stakeholders. Its contributions will help to ensure that the new framework supports effective oversight and consumer protection.
The Council will advocate for a customer-centric NFO 2, simplifying access points for lodging complaints and eliminating jurisdictional confusion. It will also prioritise statutory independence, ensuring that NFO 2 operates free from industry or government influence, thereby boosting public confidence.
The Council will maintain ongoing dialogue with policymakers, regulators, and ombud schemes to ensure a cohesive approach to the implementation of the reforms.
