FAIS Ombud Council Rules for the Ombud for FSPs – Compensation Limit raised

FAIS Ombud Council Rules for the Ombud for FSPs – Compensation Limit raised

• 05 July 2024
• Regulatory Compliance and Legislation
• South African Accounting Academy

Previously, complainants with losses exceeding R800,000 often needed to forgo the excess before this Office could proceed with its investigation. The increase in the Office’s jurisdiction, which has remained unchanged since its inception in 2004, allows it to offer greater assistance to complainants. Complaints involving retirement advice, especially post-retirement transactions involving annuities, can often exceed R800 000. Inflationary effects since 2004 have also seen financial planning advice-related complaints increasingly exceed the original R800 000 jurisdictional limit.

The Office has resolved complaints for amounts in excess of the R800 000 limit due to the applicable Financial Services Providers agreeing to this Office’s jurisdiction being exceeded. We acknowledge and appreciate the efforts of Financial Services Providers to treat customers fairly in this regard.

The Office does anticipate a possible increase in complaints it receives and investigates but is confident that it will meet the challenge.

One of the most important Rules that remain is that for a complaint to be justiciable by the Office of the FAIS Ombud, this Office must be satisfied that the complainant has endeavoured to resolve the complaint with the respondent and that the respondent must have failed to address the complaint satisfactorily within six weeks of its receipt. If the respondent has not been provided with an opportunity to resolve the complaint, it is first sent to the respondent using the Premature Complaints Handling Process. This process has resulted in many complaints being resolved within the six-week period without the need for a formal investigation.

The Ombud Council Rules are binding in terms of the Financial Sector Regulation Act, 2017 (FSR Act) and come into operation on the publication date. The Ombud Council Rules replace the previous Rules on Proceedings of the Office of the FAIS Ombud that were in operation since 2004.

The revised Rules do not change the practical, fair and efficient approach the Office follows in resolving complaints. The revisions include using updated descriptions for processes and aligning the Rules to best practices. The Office will no longer receive complaints against unregistered Financial Services Providers.

Complaints in this regard will be referred to the Financial Services Conduct Authority, as the regulator with the appropriate enforcement powers. Consumers are constantly encouraged to verify whether they are transacting with registered financial services providers, as the Office’s services will not be available if the complaint relates to unlawful unregistered entities.

The Ombud Council Rules for the FAIS Ombud are available on the Ombud Council’s website, www.ombudcouncil.org.za, together with a statement of need, intended operation and expected impact of the Rules, and a Consultation Report responding to issues raised during the public consultation on the Rules.

The Ombud Council’s objective is to help ensure that customers have access to and can use affordable, effective, independent, and fair alternative dispute resolution processes for complaints about financial institutions, financial products, financial services and services provided by market infrastructure.

Click here to download the Press release:

https://www.faisombud.co.za/wp-content/uploads/2024/07/Ombud-Council-Rules-for-the-Ombud-for-Financial-Services-Providers.pdf

Relevance to Auditors, Independent Reviewers & Accountants:

• FAIS is yet another piece of legislation that your clients must comply with, and which you must assess compliance with.  If they don’t comply with the relevant laws and regulations, you have certain reporting obligations in terms of NOCLAR (NOn-Compliance with Laws And Regulations) – this could include reporting to management, qualifying your audit opinion, reporting a Reportable Irregularity, etc.
• As an auditor, independent reviewer and accountant, you need to consider the latest publications from the FAIS Ombud, especially as it relates to the Ombud Rules.

Relevance to Your Clients:

• An entity (company or close corporation) has a duty to comply with the FAIS Act, as well as the Ombud Rules.
• As legislation, regulations and rules are continuously changing and evolving, it is of utmost importance for companies to remain up to date on the latest publications by relevant regulators, including the FAIS Ombud.

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