Big jump in financial complaints

Johannesburg - The office of the FAIS Ombud for financial service providers witnessed a growth of 27.5% in complaints and enquiries in the 2007/2008 financial from 4 482 to 5 720.

The office resolved 486 cases where providers financially compensated complainants.

There were 1 218 cases that were assessed and dismissed for various reasons, while 18 determinations were issued.

The quantifiable amount of such settlements and determinations increased by almost 40% from R10m to just over R14m, according to the FAIS Ombud, Charles Pillai.

Pillai said on Friday at the release of the office's annual report that while there has been a move towards professionalism by financial services providers dealing with mainstream products, it is evident that unsophisticated, vulnerable consumers continue to suffer abuse especially where financial products are an adjunct to credit transactions.

"The FAIS Act clearly mandates us to apply principles of equity when considering a complaint. We have, for the first time, pronounced on the application of these principles in the adjudication of a complaint," Pillai said.

He mentioned that in one particular case the Ombud had "flayed" a major furniture retailer in a hard-hitting determination for "fleecing" a vulnerable domestic worker who had purchased basic furniture on credit only to discover that she had also been sold a credit life policy, a warranty, a goods insurance policy and had also been charged contract fees.

Pillai added that while the FAIS Ombus had traditionally focused on broker conduct in the rendering of a financial service, an opportunity had arisen where to join the administrator as agent of an insurer whom it was concluded formed part of the chain in rendering the financial service.

"It is significant that we issued more determinations (12 out of 18) where we did not uphold complaints. This is a positive indication that providers are in fact rendering financial services more professionally with an eye on the various codes of good practice," Pillai added.

The majority of the complaints received during the year - some 33% - emanated from Gauteng, followed by KwaZulu-Natal (14%) and Western Cape (11%).

"This may be on account of the location of the Office within this province (Gauteng), but it is also indicative of the need for greater consumer awareness in other provinces," Pillai said.

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