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Complaining made easier

by | Apr 16, 2024

The creation of the National Financial Ombud Scheme will make it much easier for consumers of various financial products to find redress.

National Financial Ombud SchemeThe financial industry has mechanisms for dispute resolution that consumers are often not aware of. These are the financial sector ombud schemes. Since late 2020, the Financial Sector Regulation (FSR) Act has made it compulsory for a financial institution to belong to the relevant industry ombud scheme if there is one for its sector.

Some of the schemes are voluntary, which means they are formed by that specific industry – for example an ombud was set up by long-term insurers to deal with long-term insurance customer disputes. Other voluntary schemes existed for short-term insurance, banking, credit, and the JSE.

Then there are statutory ombud schemes which are created by law. These include the Ombud for Financial Services Providers (commonly referred to as the FAIS Ombud) which deals with disputes relating to advice and intermediary services (irrespective of the product offering), and the “backstop” statutory ombud, designated to deal with a complaint when there is no other ombud mandated to deal with it (a role currently also given to the FAIS Ombud). The third statutory ombud is the Pension Funds Adjudicator.

While these schemes are all effective at dispute resolution, it has been very confusing for consumers who find it difficult to figure out which ombud scheme they should direct their complaint to.

For example, if you take out a home loan from a bank, you usually purchase a bundle of services which includes life insurance as well as homeowners’ insurance which insures your building.

Although you are dealing with a single bank, until now the products offered fell under three different ombud schemes, namely, the Ombud for Banking Services, the Ombud for Short-Term Insurance and the Ombud for Long-Term Insurance. Clients who experienced a problem with the life insurance element may have incorrectly approached the banking ombud only to discover that they should be dealing with the long-term ombud.

Most credit products include credit life insurance, which fell under the Ombud for Long-Term Insurance. But if the credit provider is a bank, it would have fallen under the Ombud for Banking Services while a non-bank credit provider fell under the Credit Ombud.

Introducing the National Financial Ombud Scheme

To simply the process and provide consumers with a single point of entry, the National Financial Ombud Scheme (NFO) was recently created. The four main industry ombuds have merged into a single, overarching industry ombud scheme. The NFO will be made up of four divisions, covering each of the four sectors covered by the previous schemes.

This is great news for the consumer, who can now submit their complaint to the NFO. In cases where a complaint cuts across product sectors, the various industry-based divisions would then work together to resolve the complaint.

Currently four of the previous ombud schemes have been merged to form the NFO, namely banking, credit, short-term insurance, and long-term insurance. This excludes the FAIS Ombud which remains a challenge as there are many complaints against product providers related to poor advice.

For example, a consumer may be mis-sold an insurance product which was not appropriate for their needs. The issue would not necessarily be with the product itself, but with the advice given.

Leanne Jackson, Chief Ombud (CEO) of the Ombud Council explains that the next step will be to include the FAIS Ombud into the NFO, however because the FAIS Ombud is a statutory ombud it requires a change in the law. This is part of a longer process of consolidating ombud schemes which is set out in National Treasury policy documents.

However, since new legislation usually takes a long time to get passed, Jackson says that in the interim, the Ombud Council is working on ways to improve consumer outcomes and the effectiveness of the ombud system. The NFO will work closely with the FAIS Ombud and refer relevant cases to the FAIS Ombud, and vice versa.

The Ombud Council is the regulatory body that oversees the NFO and various ombud schemes (including the statutory schemes) and is responsible for the governance and accountability requirements.

Its role is to create a framework for effective alternative dispute-resolution mechanisms across the financial sector. It also has the powers to allocate a case to the best-suited ombud where no other existing ombud is available.

It does not provide dispute resolution for consumers unless the complaint relates to poor service delivery by the relevant ombud scheme. It is important for consumers to note that the Ombud Council cannot adjudicate or overrule a finding made by an ombud scheme.

What to do if you have a complaint

Always start by lodging your complaint with the financial institution itself. All companies have an internal dispute-resolution process.

If you are unhappy with the outcome, you can lodge a complaint with the NFO. This can be done on their website, via email to, or you can call 0860-800-900.

You’ll receive a letter of acknowledgement. The service provider has 21 working days to respond to the complaint. Once the investigation is complete, the Ombud will issue a ruling or recommendation. If you are dissatisfied with the ruling, you can lodge an appeal with the Appeal Tribunal.

If a service provider does not comply with the NFO ruling, this would be referred to the Financial Services Conduct Authority (FSCA).

What is an ombud?

An ombud provides an independent, impartial, fair, timely and efficient dispute-resolution process that is free to consumers.

It is independent of, and external to, the companies that are being complained about, and provides ordinary people a free, practical way to resolve complaints without having to go to court.

Ombuds aim to redress the imbalance of resources and expertise that is likely to exist between a consumer and a financial institution, so that neither party needs a lawyer.

Unlike a Regulator that can only assist with transgressions of the law, an ombud can adjudicate on principles of fairness in addition to contract terms and law, and has more flexibility in terms of how it can respond to complaints, and the action it can request the financial institution to undertake, including redress.

Unlike a court, ombuds usually also deal with enquiries, and report on the lessons learned from the complaints they have handled — so that things can be improved in future for all consumers.

Source: National Treasury: A Known and Trusted Ombuds System for All

This article first appeared in City Press.


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Maya Fisher-French author of Money Questions Answered


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