The Office of the Financial Advisory and Intermediary Services (FAIS) Ombud has recently released its Annual Report for the 2022/2023 Financial Year.
The report provides information on the performance of the Office of the FAIS Ombud during the financial year as well as its financial affairs.
Ombud for Financial Services Providers John Simpson said: “The year was a challenging one indeed, as there were many issues within the Office that required urgent attention. Numerous key staff vacancies made it especially difficult for the Office to deliver on its mandate. Progress was made in filling the Deputy Ombud position (which has been vacant for many years) and the Human Resources manager and Assistant Ombud positions.”
Simpson said the Office aims to resolve disputes in the most expedient and conciliatory way possible, as this approach benefits consumers and the Financial Service Providers (FSPs).
"Determinations are regarded as a last resort option which should only be used if all other efforts to resolve the matter have failed. In achieving this aim, the Office did not need to issue any determinations for the financial year. Disputes were resolved by ongoing interaction and discussion with the parties. The cooperation by the FSPs in this regard is appreciated and commended.”
Simpson also addressed the property syndication complaints saying that: “Over a thousand active property-syndicate-related complaints, opened in 2009 to 2014, presented a serious problem for the Office. Numerous determinations on these matters were set aside by the Financial Services Tribunal, and the Office engaged in ongoing litigation with the respondents in the High Court, which was largely unsuccessful.
"The Office was no closer to successfully resolving these complex and highly disputed matters than it was when they were opened, more than ten years ago. A decision had to be made on whether the Office was the appropriate forum to resolve these disputes," Simpson said.
He said matters where the determinations were set aside by the Tribunal and were referred back for reconsideration (in some cases more than once) were closed as being more appropriate for a court of law.
"The Office is in the process of withdrawing from the various property-syndicate-related High Court litigation matters in which it was involved. The Office sincerely sympathises with the elderly consumers who were affected by the failure of these property syndicate investments, but the ombud process is not appropriate due to the nature of these disputes.
"Despite the numerous challenges faced by the Office, it managed to assist thousands of consumers and resolve many complaints. The Office received 6 483 complaints, which were within its jurisdiction, of which 4 796 were resolved. In 29% of the matters, a settlement was reached, and R39 133 121 in compensation was awarded to the consumer. The matters were closed within an average of 38.24 working days. These statistics compare favourably with similar ombud organisations locally and internationally," Simpson said.
According to Simpson, the Office achieved 81.8% of its Annual Performance Targets (18 of 22). Some of the targets were missed by a fraction of a percentage. He said ongoing efforts would be made to achieve 100% of the targets.
The Office said it also achieved a clean audit opinion for the 2022/23 financial period. The Ombud was appointed on November 1, 2022, and at that time, the Commissioner of the Financial Sector Conduct Authority was the Accounting Officer for the Office.
"Following the amendment of sections 22 and 23(1) of the Financial Advisory and Intermediary Services Act, 2002, by the implementation of the Financial Sector and Deposit Insurance Levies Act No. 11 of 2022 (‘Levies Act’), the Ombud became the Accounting Authority for the Office as from April 1, 2023. Therefore, the report is signed by both the Ombud and the Commissioner, where applicable.
"During the 2022/23 financial year, the Office of the FAIS Ombud received 10 970 new complaints. This is lower than the 11 827 complaints received for the corresponding period during the 2021/22 financial year and represents a 7.25% decrease in the number of complaints received over the preceding financial year. In addition, 59% of all complaints received fell within the mandate of this Office.
"This resulted in 6 483 complaints being referred to the Case Management department for investigation. Of the 6 483 complaints received for the 2022/23 financial year that fell within this Office’s jurisdiction, a total of 2 783 complaints were dismissed. A total of 639 complaints were referred to alternative fora, and 1 364 complaints were settled in favour of the complainant. The number of complaints settled, 1 364, was more than the 1 269 complaints settled during the 2022/23 financial year," it said.
This is a testament to the efforts made and commitment to the conciliatory resolution of complaints by this Office and FSPs alike to ensure that complainants continue to be treated fairly. The number of complaints received during the 2022/23 period that were carried over was 1 687, which was lower than the 1 810 carried over during the previous financial year, the Ombud said.
"A total of 4796 complaints were resolved within the financial year, which represents 73.99% of all justiciable complaints received. Overall, the total number of justiciable complaints resolved, which included those carried over from previous financial years, was 6 614.
"The number of complaints settled during 2021/22 was 1 934 and was an increase on the 1 823 positively resolved in favour of the complainant during the previous financial year. As a result of this, the Office of the FAIS Ombud was able to increase its settlement ratio from 27.59% during the 2021/22 financial year to 29.24%," it said.
According to the Ombud, the overall settlement value for the 2022/23 financial year was R39 133 121. On average, 84.04% of all complaints received by the Office are resolved within three months, 91.05% within six months, and 96.47% within nine months.
"The dismissal of complaints is only considered after significant due diligence has been undertaken during the investigation, and the Ombud Office is required by law to provide detailed reasons for any decision made inclusive of complaints dismissed. Any party that feels aggrieved by the decisions taken by this Office can approach the Financial Services Tribunal for the matter to be reconsidered.
"During the 2022/23 financial year, a total of 104 applications for reconsideration were made to the Financial Services Tribunal. This was lower than the 158 made during the previous campaign and is due to improved quality control measures implemented within the Case Management Department," it said.
Of the 95 matters decided on as of March 31, 2023, 85 of those applications were dismissed with only five referred to the Office for further investigation.
"This reflects a favourable rate of agreement (94.44%) by the Tribunal. Therefore, whilst a total of 4 736 complaints were dismissed during the 2022/23 financial year, the positive affirmation of this Office’s decisions by the Tribunal confirms this Office’s commitment to the diligent investigation of complaints in accordance with its mandate to provide independent and impartial rulings," it said.
According to the Ombud, in respect of complaints referred to other fora, a total of 4 301 complaints were referred to other ombud schemes, which was higher than the 3 947 referred during the 2021/22 financial year.
"This is in accordance with the commitment of the Office of the FAIS Ombud, which is to ensure that even where it is unable to be of assistance, the complaint of any person submitted to this Office will be carefully considered and that where possible, the complainant shall be referred to the correct forum to receive the assistance required. All this is part of our continued commitment to service and enhance access to justice for all South Africans.
"The Ombud, Advocate Simpson, and the Office of the FAIS Ombud would like to convey our sincere appreciation to the Commissioner and the Governance Committee members for their continued support and assistance to the Office and to thank the FAIS Ombud staff for their dedication and commitment to serving the public and the Office’s stakeholders," it said.