Adviser rights are as important as those of consumers

A recent media release by the Office of the FAIS Ombud on World Consumer Rights Day noted:

“Every year since 1983, March 15 has been celebrated as World Consumer Rights Day, and it is an opportunity for the Office of the FAIS Ombud to draw attention to the rights and responsibilities of consumers of financial services. It is important that consumers have access to clear and accurate information about financial products and services, and that they are empowered to make informed decisions.

“The Office is committed to promoting consumer protection and enhancing the integrity of the financial services industry. This is a commitment born from our credo to assist both consumers and financial service providers understand their respective rights and responsibilities. Our aim is to reduce the level of complaints and improve confidence in the financial services industry. To achieve this, we constantly strive to educate those we serve about our services and to make our services easily accessible and ensure all parties in a dispute have an opportunity to present their case.

“Our aim for this year’s World Consumer Rights Day is for consumers to be recognised as core marketplace actors, and for the focus to be on consumer needs and good business practices. This is what the General Code of Conduct for Authorised Financial Services Providers and the Office seeks to achieve. Financial services providers are expected to conduct themselves with the required due skill care and diligence in interests of the client and to the benefit of the financial services industry. Consumers of financial services should receive advice that is appropriate in respect of their specific financial needs and circumstances and material disclosures must be made so that they are empowered to make informed decisions. This will enable consumers to play an active role in their financial planning journey.”

It is particularly heartening to read about the Office’s positive recognition of the role of financial services providers.

In the good old days, when the first FAIS Ombud, Charles Pillai, ruled, there was a sense of fair play which one would expect of this important office. Pillai, being involved in theatre, was verbose in an old King Cole way, but he provided rock solid guidance on the interpretation of the new legislation, enabling both consumers and advisers to understand their rights.

In an article I wrote in 2021, I noted:

“Pillai brought legal certainty to legislation that was challenging for both the FSB as regulator and the industry, whose permission to self-regulate was withdrawn by the FAIS Act.

“Unfortunately, the guiding role of the Office of the FAIS Ombud in the correct application was gradually transformed into a more dictatorial one. The allowance for the ombud to operate in a less formal manner led to a number of controversial decisions, and a perception that the office saw itself more and more as being above the law, and above reproach.”

Unfortunately, after Pillai’s sad passing in 2010, there was a shift in the approach from the ombud’s office. In the words of Janis Ian, financial advisers became those with “ravaged faces, lacking in the social graces”. The Financial Services Tribunal, on a substantial number of occasions, commented on this prejudice.

Apart from a scathing rebuke on the ombud’s decision to pierce the corporate veil in the Siegrist/Bekker case, it also noted the following on the Gawie du Toit case:

“…procedural criticisms have been made ‘time and again’ against the ombud similar to those that were raised in this matter. These were that the ombud:

• Did not follow the proper process in investigating and determining the matter;
• Did not act fairly and impartially; and
• Accepted the complainant’s version despite evidence to the contrary and where there were material disputes of fact.”

In the words of Janis Ian’s title song from the seminal album At Seventeen: “Pity please the ones who serve/ they only get what they deserve.”

It is therefore heartening to read that the FAIS Ombud is committed to “…assist both consumers and financial service providers understand their respective rights and responsibilities”.

The last two annual reports from the previous acting ombud focused almost obsessively on consumer education, with little regard for those lacking in the legislative “social graces”.

Since the appointment of the new FAIS Ombud, we have seen a marked improvement in communication with the industry, as well as consumers.

Rather than gloat on the increase in the number of complaints, the focus appears to have shifted to “…reduce the level of complaints and improve confidence in the financial services industry”. This is a welcome departure from the latter-day approach of finding scapegoats.

A further goal, which will add to the more worthy cause of improving the image of the industry, is the ombud’s stated intention to “…constantly strive to educate those we serve about our services and to make our services easily accessible and ensure all parties in a dispute have an opportunity to present their case”.

We ask for no more than this.