FAIS Ombud returns R32,9-M to aggrieved consumers

The Office of the Ombud for Financial Services providers has matured into a veritable forum for the correction of investor abuse with an amount of R32,9 million being placed in the hands of consumers in the past year.

Launching his 2008-09 annual report today, FAIS Ombud Charles Pillai said the quantum of complaints settled or determined in the last fiscal period was an increase of 132%.from the R14,1 million awarded to aggrieved consumers in the previous financial year.

“This is a clear indication that the Office is being seen; that people recognise the role that the FAIS Ombud can play in resolving financial disputes,” Pillai said.

He said the global financial crisis and the recession that followed hard on its heels had seen a substantial rise in the number of complaints and enquiries received. Complaints and enquiries grew by 30% year on year. Complaints falling within the FAIS Ombud’s jurisdiction had almost doubled from last year.

Delivering his last report after six years as FAIS Ombud - his second term of office comes to an end in January 2010 - Pillai noted that:

• complaints and enquiries had increased from 5 720 (2007/08) to 7 416 this year - an increase of 30%.

• of the 7 416 complaints and enquiries received, 1 384 were dismissed as being without merit; 305 were settled involving monetary compensation; 2707 were referred to other forums and 1 820 were carried over into the new financial year.

• of 21 determinations issued, complaints were upheld in 14 cases and rejected in seven.

• since inception, the FAIS Ombud has handled 22 030 complaints and enquiries from aggrieved financial services consumers involving total monetary compensation of

R64 075 798.

Pillai said he was pleased there has been a steady decline in complaints in which unauthorised policies plagued consumers.

The typical victim of this kind of unlawful practice is the civil servant whose salary is managed through the state-run PERSAL payroll system.

The practice involves policies taken out in the name of an individual without their knowledge or consent.

To illustrate the harm done to consumers through fictitious policies, complainant Nonhlanhla Clarah Khawula personally related her experience to the audience and thanked the Office of the FAIS Ombud for retrieving her lost money.

Pillai said it was a matter of concern that several of the trends identified in last

year’s annual report continued or increased.

The incidence of credit life policy claims that continue to be repudiated due to alleged non-disclosure of pre-existing conditions was highly prevalent. When the complaint is investigated, it is often clear that the insured was never pertinently made aware of the pre-existing conditions clause in the insurance contract.

The consequences of repudiation of such policies are that dependants are left with a huge financial burden of having to settle the outstanding debt on a house or a motor vehicle

purchased through a loan agreement.

In a message in the annual report, former Minister of Finance Trevor Manuel said ‘having taken the first bold steps towards creating a sound institutional framework for the Office of the FAIS Ombud, the seedling had blossomed into a sturdy tree”.

“As the end of his term of office nears, Mr Pillai can look back and believe that he has fulfilled the objectives that were set for him. The Office of the FAIS Ombud is now

recognised as an international institution.

“The impact of the FAIS Ombud on the financial sector has been remarkable in the relatively short time it has been in existence,” said Minister Manuel