A tragic loss

At a time when the public protector has become a toothless kitten and the Auditor-General's scathing reports on State departments are simply ignored, Ngalwana has proved himself the most forceful public advocate of the man in the street.

It's also not surprising that he's increasingly frustrated. Policyholders apparently haven't yet benefited from any of the R3.5bn settlement the assurers agreed to last year. In a fresh ruling last week, Ngalwana complained that the settlement is flawed anyway, partly because it's voluntary and partly because it sets too high a hurdle rate, effectively allowing life offices to deduct up to 35% of the value of retirement annuities in costs.

He's also concerned that assurers continually appeal to the courts to overturn his rulings and that he's unable to argue his point of view when they do so.

That raises several issues, which may not be as clear-cut as Ngalwana seems to imagine. First, he himself functions in a quasi-judicial role and it isn't part of the judicial ethic for him to argue in a higher institution.

Basic problem

The basic problem is that while referral to a higher court is an inalienable right, in this instance it frustrates the object of having an adjudicator, which is to relieve the individual of the often-unbearable cost of establishing his rights in the formal judicial system.

That's compounded when heavy-handed assurers threaten to sue policyholders for costs incurred in a court action - though given the life offices' knee-jerk confrontational arrogance we needn't be surprised at their attitude.

Recent indications of a softer line are welcome but don't address the core issue: when it comes to recourse to the courts, large corporations can always afford the best lawyers. The only way I can think of to get around that is either for the assurers to agree to accept the adjudicator's rulings or to provide some sort of special legal aid to individuals trying to implement such a ruling.

Sadly, I don't see either course as being practical in the short run. Assurers will be loath to forgo their legal rights, while a spokesperson for the Financial Services Board, under which the adjudicator falls, has made it clear that it believes the adjudicator's office gets the maximum possible funds. But something must be done or there's little point in keeping the institution alive.

It's strange that the short-term insurance business doesn't seem to have the same problem. As far as I know, the short-term ombudsman's rulings are generally uncontested. Of course, the amounts at stake are probably lower.

Plans to go out with a bang

At least Ngalwana plans to go out with a bang. When he announced his pending departure he also promised another major shock for the industry.

He's since issued a ruling that investors must be allowed to switch from one retirement annuity contract to another if they're dissatisfied with the performance of the one they're in. Currently, only Liberty Life allows that without restrictions.

One industry analyst estimates that it could cost the life offices another R300m - a fleabite, after last year's settlement. Far more significant in the long run will be the extension of consumer choice and the extra pressure to perform, as policyholders will no longer be locked in for the duration of a contract.

That ruling anticipates one of the likely amendments to the Pension Funds Act scheduled to come before Parliament early next year - though on past form I won't be surprised if this deadline isn't met. Maybe the amendments should also consider some way of making rulings from the office of the adjudicator easier to enforce.

Meanwhile, the search will be on for Ngalwana's successor. We can't afford another gap like the year in which the office was empty between the departure of the previous occupant John Murphy and Ngalwana's appointment.

It needs a person of very special qualities that may add to Ngalwana's strong moral drive and sense of justice - a more diplomatic touch in the office's relations with the industry.