Statistics contained in the FAIS Ombud’s annual report show that settlements of complaints outnumber determinations by a count of nine to one. Does this mean that only one in ten FSPs are of the opinion that they acted in a compliant manner?
In my view, it is mostly a case of being unsure about the possible outcome of responding to the enquiry from the Ombud, and rather opting for the safer route. Fear of losing their licence no doubt also prohibits many people from stating their case, as do a lack of in-depth knowledge of the applicable legislation.
The Ombud’s office operates in a less formal manner, compared to what is required in the legal system, although its determinations carry the same clout as a civil court. The Appeal Board, on the other hand, is often chaired by a retired judge, and considers each case from a strictly legal perspective.
Recent decisions by the Board indicate that you should seriously consider getting a second opinion if you are convinced that you were not treated fairly.
FAIS Ombud determinations
The ACS Financial Management CC appeal is a case in point. It concerned an investment in the failed Blue Zone property syndication scheme. The Ombud originally determined that the respondents should repay the client’s money.
The Appeal Board set this ruling aside, and referred the matter back to the Ombud “…for investigation of the aspects held in this decision to have not been investigated properly or at all…” After such further investigation, the Ombud should then reconsider the determination in the light of its findings.
This obviously does not mean that the appellant will be found “not guilty”. It simply means that a fairer outcome will be achieved.
The Appeal Board makes the following interesting observation in this case:
“Complainants and respondents are very much in the hands of the Ombud when it comes to what should be investigated and although nothing stops one of them from making representations to the Ombud as to issues that should be investigated or as to whether, for example, investigation should involve affidavit or oral evidence, in the main the parties do not seek to contend for procedures different from those adopted by the Ombud. As things have turned out, both the appellants and the respondent, absent this appeal, would have had to live with a determination arrived at after what we consider to have been insufficient investigation.”
FSB Enforcement Decisions
Appeals do not only apply to FAIS Ombud decisions. The Board also made an interesting ruling regarding a debarment by the Registrar of Financial Services.
In the Bekker case, an appeal was upheld, with costs, and the matter remitted to the Registrar “…for reconsideration whether, on the findings of this Board, the imposition of debarment should stand and, if so, reconsideration of the duration of such embarment (sic).” It also made provision for the appellant and the FSB to present submissions and, at the Registrar’s discretion, further evidence.
When considering an appeal, there are a number of important aspects to take into account:
- Follow the correct procedure – there are several examples where an appeal failed due to the appellants not following the laid down procedures, notably lodging an appeal within 30 days of the determination.
- Seek expert advice – in a number of cases, representation by a lawyer or advocate did not succeed. It appears that their lack of practical experience at times led to incorrect interpretation, and failure of the appeal.
For more information on the Appeal Board and its workings, please visit the FSB website and click on the “Appeal Board” button.