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Cape Town - The Office of the Ombud for Financial Services Providers (Fais Ombud) received over 4 200 complaints in the 2015/16 financial year and a total amount of R50.2m was paid out in settlements, according to the institution’s most recent annual report.
“These numbers are likely to increase as the Office of the Fais Ombud strengthens its visibility and reputation as an effective dispute resolution mechanism, and South Africans gain stronger financial empowerment,” said Finance Minister Pravin Gordhan in the forward of the report.
The Fais Ombud was established in 2002 to act as a dispute resolution forum between clients and financial services companies. The body intermediate in instances where financial services providers struggle to resolve complaints with their clients, but also dismiss complaints without merit.
In the 2015/16 financial year the number of complaints increased by more than 800 from 9 003 in the previous year to 9 891. However, only 4 263 were justifiable complaints.
The majority of the complaints received (3 161) were regarding the short-term insurance industry, followed by complaints about long-term insurance policies (2 627).
READ: Insurance ombud gets record number of complaints
The Office of the Fais Ombud noted a growing number of complaints that emanate from the emergence of third parties that act as introducing brokers for forex trading companies.
“These third party entities are not registered with the Financial Services Board that regulates all financial services providers,” said Noluntu Bam, Fais Ombud.
“And they target mainly individuals in the rural areas where, for as little as R5 000, prospective clients are lured with the promise of significant monthly returns.”
Bam said the main aim of these “third parties” is to benefit from unsuspecting clients, as they often manage the “investment” to the detriment of the client.
The Ombud also noted that disability products and benefits continue to be sold indiscriminately.
READ: Complex insurance, disability claims worry Ombud
Disability and retrenchment benefits are often sold to contract workers and self-employed people who don’t always qualify for these benefits and have little chance of claiming successfully for these type of benefits.
The Office of the Fais Ombud recorded a revenue of R43.4m for the 2015/16 financial year and Bam said in light of the current financial position, the Board is satisfied that her office has access to adequate resources to continue its operations for the foreseeable future.
