The latest FSCA newsletter provides details of this very important oversight body, established in terms of the Financial Sector Regulation Act.
This Act requires financial institutions to be a member of an industry ombud scheme. It also empowers the Ombud Council to allocate a case to the best-suited ombud where no voluntary ombud is available.
The Act also requires the Ombud Council to establish a single point of entry into the ombud system, by clarifying the relationships between the Ombud Council, ombuds, financial institutions and the FSCA, in respect of governance, reporting, respective responsibilities, and cooperation. This is something we have been punting for years, given the enormous amount of time “wasted” on investigating cases which fall under a different dispute resolution body.
All ombuds are required to consider the principle of equity and fairness in investigations and decision making (in addition to the laws of contract and financial services). The FSB Appeal Board, and more recently, the Financial Sector Tribunal, have, on a number of occasions, chided the FAIS Ombud, in particular, in this regard.
The objective of the Ombud Council is to ensure that financial customers can have access to effective, independent, fair and affordable alternative dispute resolution processes for complaints related to their interactions with financial institutions.
The Council will recognise industry schemes, set governance procedures, enhance accountability requirements, and align the standards of practice for each Ombud scheme through rule-making and enforcement powers. This will enable it to develop a uniform framework of external dispute resolution mechanisms that can be applied with consistency across the financial services sector. One must assume that the Council will also see to it that complaints are handled expediently, which is currently seriously lacking at the office of the FAIS Ombud, where numerous complaints date back to 2012 and earlier.
In its role of overseeing ombud schemes, the Council will effectively become a ‘regulator’ of ombuds, with authority to standardise best practice and to promote and coordinate cooperation amongst ombuds. The Ombud Council will have oversight powers over both the statutory and industry Ombuds, namely:
- Office of the Pension Fund Adjudicator
- Office of the FAIS Ombud
- Office of the Credit Ombud
- Ombudsman for Long – Term Insurance
- Ombudsman for Short – Term Insurance
- Ombudsman for Banking Services
- Johannesburg Stock Exchange Ombud
The Minister of Finance appointed Ms Eileen Meyer as the Chief Ombud for the Ombud Council for a short period. The Council’s Board of Directors include:
- Deanne Wood – Chairperson
- Adv Dikeledi Chabedi – Vice Chairperson
- Emmanuel Lekgau
- Silindile Kubheka
- Adam Horowitz
- Charmaine Soobramoney
- Unathi Kamlana, newly appointed FSCA Commissioner.
It is particularly heartening to note the inclusion of Ms Deanne Wood on the Board. She did sterling work in her rather short tenure as the Short-term Ombud, and in her role as Chairperson will certainly put that experience to good use.
The establishment of the Ombud Council to transform the financial sector comes with many advantages and expectations. Not only will financial customers enjoy more customer-centric services and products from financial institutions, they will also get better protection from a dispute resolutions process that is effective, independent, fair and timely.
We trust that this reference to “independence” and “fairness” will cut both ways. Whilst an informal approach does (or should) contribute to matters being resolved more expeditiously, it also provides an opportunity for unfairness where bias exists. This is especially true when the judge also acts as prosecutor.
