The Credit Ombud, the Ombudsman for Banking Services, the Ombudsman for Long-term Insurance (Olti), and the Ombudsman for Short-term Insurance (Osti) are aiming to amalgamate into one ombud scheme by 1 January 2024.
The interim name for the single scheme is the National Financial Ombudsman, Judge Ron McLaren said in the Olti and Osti’s 2022 annual report. Judge McLaren retired at the end of 2022 as the joint Ombudsman for both schemes.
The amalgamated scheme will later include the FAIS Ombud and the JSE Ombud.
The amalgamation of the four schemes is the result of a call by National Treasury for a rationalisation of the financial ombud schemes in line with its Twin Peaks reform of the financial sector.
“At the core of this reform was the strengthening and improvement of market conduct in the South African financial sector, which includes the ombud system. One of the criticisms levelled at the financial ombud system was that it was fragmented, which led to consumer confusion and jurisdictional gaps,” said Edite Teixeira-Mckinon, the chief executive of the Osti.
At the request of National Treasury, the World Bank Group conducted, in 2020, a diagnostic of the financial ombud schemes in South Africa, and the diagnostic report was published in July 2021. The amalgamation of the four ombud schemes is largely based on the World Bank Group’s recommendations, Teixeira-Mckinon said.
Judge McLaren said a policy decision by National Treasury about the implementation of the recommendations in the diagnostic report “appears to be imminent”.
The four ombud schemes obtained mandates from their respective boards and councils to proceed with the amalgamation project, and earlier in 2022 they started planning the practical and physical amalgamation of the four schemes into a new scheme, which, for the time being, is referred to as the National Financial Ombudsman (NFO), according to an amalgamation progress report that was submitted to a meeting with the Ombud Council and National Treasury in December 2022.
“The proposed start date that we are working towards for the NFO to go live is 1 January 2024. We have all presented our plans to our respective boards and councils and received the go-ahead. Unless there are any unforeseen stumbling blocks or instructions to the contrary from the Ombud Council, we will continue with the process to appoint the board and to start the process of consulting with all the stakeholders,” the progress report said.
Recognition as industry ombud schemes
Judge McLaren said an important milestone for the Olti and the Osti during 2022 was their recognition as industry ombud schemes in terms of section 194 of the Financial Sector Regulation Act (FSRA).
Their recognition as industry ombud schemes means that no long-term or short-term insurer may not belong to the Olti or the Osti, respectively, in line with sub-section 211(3) of the FSRA.
Teixeira-Mckinon said the recognition of the Olti and the Osti as industry schemes does not change the way these schemes operate or the status of their decisions. However, this may change when the Ombud Council starts to issue rules, which it is empowered to do in terms of section 201 of the FSRA.
