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Dispute over where you should take your financial complaints

16 October 2004 - Personal Finance

A turf war between South Africa's industry-established financial services ombudsmen and the government and its regulator, the Financial Services Board (FSB), moved into parliament this week after years of behind-the-scenes debate.

The dispute has been brought into the open by the Financial Services Ombud Schemes (FSOS) Bill. Among other things, the Bill seeks to demarcate the respective jurisdictions of the dispute-resolution mechanisms established by Acts of Parliament and the complaints offices created voluntarily by the finances services industry. Currently, you may direct your complaints about the financial services industry to:

  • Industry-established dispute-resolution schemes - namely, the Ombudsman for Banking Services, the Ombudsman for Short Term Insurance and the Ombudsman for Long Term Insurance; or

  • Statutory schemes established by Parliament - namely, the Pension Funds Adjudicator and the recently launched Ombud for Financial Services Providers, who deals with complaints concerning financial advice.


    • The government and the industry ombudsmen disagree over whether the voluntary ombudsmen should be allowed to arbitrate on advice-related complaints in addition to product-related complaints.

    For example, if you have a complaint concerning the advice you received about a life assurance policy, the Ombudsman for Long Term Insurance wants to be able to deal with your complaint if you approach his office first and he is, in terms of the rules under which his office operates, allowed to deal with your complaint.

    However, the National Treasury and the FSB, which are piloting the FSOS Bill through Parliament, want it to be mandatory that all advice-related complaints are directed exclusively to the Ombud for Financial Services Providers.

    Initially, the government and the FSB wanted to scrap the industry ombudsmen and establish a single statutory ombudsman, who would deal with all financial services complaints. However, they have backed down, after recognising that the ombudsmen do good work.

    During a two-day hearing by Parliament's Finance Portfolio Committee into the FSOS Bill this week, the functions of the industry and the statutory ombudsmen were strongly debated.