Ombud must apply appropriate processes to disputes of fact

Patrick Bracher, Norton Rose Fulbright

In November 2021 the Financial Services Tribunal emphasised that “time and again it has been pronounced that when there is a material dispute of fact, there should be a hearing of oral evidence”.

It is only once the material disputes of fact are addressed that one can conduct an enquiry into the negligence, causation and damages aspects of a claim, in this case against a financial adviser who had recommended an investment in Sharemax.

Despite a material dispute of fact between the client and the investment adviser, the FAIS Ombud accepted the version of the client and made adverse findings.

Although the FAIS Act refers to a “right to appeal” that is not a correct description of an application for reconsideration to the Tribunal in terms of the Financial Sector Regulation Act.  The adviser said that he had gone through the Sharemax prospectus with the client and the client said that this had not occurred.  The FAIS Ombud must follow a proper process in investigating and determining a matter before the Ombud and must act fairly and impartially.  Accepting the complainant’s version despite there being evidence to the contrary and where material disputes of fact are prevalent is not the proper exercise of powers under the FAIS Act.  The Ombud’s office was established was to achieve expeditious and effective resolution of matters.  The matters should not where possible end up in the tribunal because of procedural criticisms.  Section 27(3)(c) also allows the Ombud to decline to entertain a complaint on the basis that a court or some other dispute resolution forum is a more appropriate forum to decide the complaint.

The matter was referred back to the Ombud on the understanding that the proper and appropriate processes would be followed.

The same principles apply to the long-term and short-term insurance ombuds.

Gawie en Adri du Toit Makelaars CC v Naude and the Ombud for Financial Services Providers Financial Services Tribunal case number FAB1452020 (23 November 2021)

First published by: Financial Institutions Legal Snapshot