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Financial ombud tackles 8 000 complaints

Johannesburg - The ombud for financial services providers received 7 944 complaints during the 2010/2011 financial year, but resolved far more - 8 784.

This was because a number of matters were carried over from the previous reporting year. Of the cases resolved, 91 were determinations and 988 were cases resolved without prejudice.

"Most of our time was occupied by complaints regarding money lost in property-syndication vehicles and other phoney schemes," said FAIS Ombud Nuluntu Bam. "Judging from the volumes and the pace at which complaints are coming in, this year will be no different," she said.

"Regrettably, vast sums of money have once again been stolen from consumers by what the Honourable Justice Nel describes as 'incompetent and astute directors of companies who play fast and loose with investors' money while deceiving investors and obfuscating facts on the one hand and on the other enriching themselves'. The pattern has remained the same over the years.

Phoney schemes

"As the directors of phoney schemes finance their luxury lifestyle, companies are bled of resources and eventually go into liquidation. These occurrences do not bode well for South Africa's efforts to build and maintain financial stability," Bam said.

"Difficult as it might be to define financial stability, 'it is, however, clear what kind of thing financial stability is about. It is about institutions not suddenly collapsing and causing economic damage to people who could not reasonably have been expected to anticipate the collapse'."

Bam added that during the investigation of some of these property syndication investments, her office had questioned several things - notably, the routine appearance of certain names of directors or people said to have played an influential role in these schemes.

"We also questioned whether consumers are playing their part in their own protection. I say so because from time to time newspapers all over the country carry some kind of warning to the consumer about 'shoddy' investments.

"For its part, this office has contributed to educating the consumer by ensuring that those found wanting face the full wrath of the law and that such findings are promptly made known to the public. Are the brokers and agents perhaps missing the point too?"

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