FAIS Ombud wants centre-stage in financial services industry
The Office of the Ombud for Financial Services Providers (FAIS Ombud) presented its 2007/08 Annual Report at a luncheon at Gallagher Estate in Midrand, Friday 17 October 2008. It provided an opportunity to reflect on the five years since the office was established in August 2003.
FAIS Ombud, Mr Charles Pillai, believes the office has met many of the objectives it set since inception. Pillai says that “the journey has just begun,” noting that there is plenty of work to be done before the FAIS Ombud can take centre-stage in the financial services industry.
More complaints than ever
The number of complaints received by the FAIS Ombud has been on the increase. In the latest year the total was 27.56% higher, moving from 4 484 complaints in the 2006/07 year to 5 720 in 2007/08. A worrying statistic is that the number of cases which fell in the FAIS Ombudsman’s jurisdiction actually fell 14% to 1 133. A massive 57% (approximately 3 300) of cases received by the FAIS Ombud were dismissed as outside FAIS jurisdiction. This total includes complaints that were referred to appropriate forums or dismissed.
It’s also surprising that the FAIS Ombud still gets stuck with requests to change address details and similar administrative queries. Of the 2008 complaints the FAIS Ombud referred out in the latest year, 1 318 were forwarded to financial services providers. These providers really need to get their house in order; because such complaints should never reach the FAIS Ombud in the first place. Perhaps its time for South Africa to follow the British example… The offices of eight financial services Ombudsman were rolled into a single ‘super Ombudsman’ to ensure broader consumer protection in that industry. It would certainly help with complaint processing – as each complaint could simply be channelled to the correct department within a single organisation.
Some interesting reading is the nature of complaints received. In 2007/08 the complaints entertained by the Ombud were spread between various financial services areas. The majority of complaints still come from the Life Insurance industry which accounted for 30% of the cases. Another 22% come from the short-term industry and 14% from investments. Retirement queries (5%) and Medical complaints (1%) bring up the rear, with the balance of complaints reported under the ‘not classified’ category.
Growth in volume and value of settlements
The FAIS Ombud settled 486 cases in the 2007/08 year – and the value of these settlements was sharply higher, up 40.7% to R14.154 million. This indicates a significant increase in the per complaint settlement amount. The Ombud is able to preside over complaints where compensation does not exceed R800 000.
The FAIS Ombud issued more determinations than in the previous review period. The Ombud had to make 18 determinations – which are only made when a negotiated settlement cannot be reached between the parties. It’s worth noting that the Ombud found in favour of the complainant in only 33% of these determined cases. This indicates that the financial services providers are better positioned than before when cases reach this late stage.
Five objectives for 2009 and beyond
Over the past five years the FAIS Ombud has evolved into an efficient national dispute resolution forum. But there’s plenty of work still to be done. The office identifies five critical areas of focus for the coming years. First, it needs to establish a central database to easily “track each case and generate real-time statistics and data.” Pillai notes that a new CRM system is already in place, and that staff have been assigned to ensure its efficient use. The second need is to increase the speed and efficiency of individual claims processing. The Ombud would also like to improve its knowledge management abilities to ensure knowledge is spread more effectively in the organisation and to other role-players in the industry. Of course to do this the Ombud requires full buy in from its staff.
Thus the fourth objective is “for the Ombud to be seen as an employer of choice through effective people management and an employee wellness program. And finally, the organisation believes it should market and effectively communicate its profile to ensure a broader audience is aware of the work the Ombud does. It’s particularly important that more financial consumers are made aware of the correct channels for their complaints. To this end it may be good for the FAIS Ombud to collaborate with other ombudsman in the banking and insurance arenas to launch a joint advertising campaign to reach this market.
Editor’s thoughts:
Local consumers are really lucky to have access to such a broad variety of dispute resolution bodies. But it can be confusing, and even the professional adviser battles to decide which ombudsman has jurisdiction in certain cases… Do consumers know which ombudsman to approach when they run into difficulty with a financial services provider? Add your comments below, or send them to [email protected]
