FAIS Act

The main objective of the FAIS Ombud is to investigate and resolve complaints in terms of the FAIS Act and the Rules promulgated under the Act.

The FAIS Ombud deals with complaints submitted to the Office by a specific client against a financial services provider. “Complaint” refers to a specific complaint relating to a financial service rendered by a financial services provider or a representative of such provider to the complainant. “Client” refers to a specific person or group of persons, excluding the general public, who is or may become the subject to whom a financial service is rendered intentionally, or is the successor in title of such person or the beneficiary of such service.

The complaint must relate to a financial service rendered by a financial services provider or the representative of the provider.

“Financial services provider” refers to any person who, as a regular feature of the business of such person:

• Furnishes advice; or
• Furnishes advice and renders any intermediary service; or
• Renders an intermediary service.

“Financial service” refers to any service contemplated in paragraph (a), (b) or (c) above.

“Advice” refers to any recommendation, guidance or proposal of a financial nature furnished by any means or medium to any client or group of clients and that relates to the purchase of, or the investment in, any financial product or on the conclusion of any other transaction in respect of any financial product.

“Intermediary service” refers to any act performed by a person for or on behalf of a client or a product supplier:

• The result of which being that the client may enter into, offers to enter into or enters into any transaction relating to a financial product with a product supplier; or
• With a view to buying, selling or otherwise dealing in a financial product purchased by a client from a product supplier or in which the client has invested; collecting or accounting for premiums or other moneys payable by the client to a product supplier in respect of a financial product; or receiving, submitting or processing the claims of a client against a product supplier.

Provided a party performs the function of furnishing advice or rendering an intermediary service in respect of a financial product, that party will be subject to the jurisdiction of the FAIS Ombud. The responding party could, therefore, be a product supplier (e.g. a long-term insurer, a short-term insurer or a bank), a financial intermediary (e.g. an insurance broker in the long-term- or short-term insurance industry), an investment manager, or a representative who renders a financial service to a client for or on behalf of any of these persons.

“Financial product” refers to all types of securities and financial instruments: a participatory interest in a collective investment scheme; a long-term- or a short-term insurance policy; a benefit provided by a pension fund or a friendly society; or a foreign-currency-denominated investment instrument. The term “financial product” also covers: a bank deposit; a health service benefit provided by a medical scheme; any comparable financial product issued by any foreign product supplier and marketed in the Republic; or any combined product containing one or more of the listed financial products.

A complaint could arise where, in the rendering of a financial service by a Financial Services Provider or their representative, it is alleged that the financial services provider:

• Has contravened the provisions of the FAIS Act and that the complainant has suffered or is likely to suffer financial prejudice or damage;
• Has acted wilfully or negligently in rendering the financial service and has caused or is likely to cause prejudice or damage to the complainant; or
• Has treated the complainant unfairly.

Any act of omission complained about must have occurred on or after 30 September 2004. The complaint must not constitute a monetary claim in excess of R3 500 000,00 unless the responding party has agreed in writing to this limitation being exceeded.

Before submitting a complaint to the Office, the complainant must endeavour to resolve the complaint with the responding party. The responding party has six weeks in which to resolve the complaint with the complainant. After receipt of the final response of the responding party, the complainant has six months within which to submit a complaint to the FAIS Ombud.

The complaint must not relate to the investment performance of a financial product, unless such performance was guaranteed in express terms. Alternatively, performance could appear to the FAIS Ombud as deficient enough to raise a prima facie presumption of fraud, negligence or maladministration on the part of the responding party.

A complaint will not be investigated if, before the date of receipt of the complaint by the FAIS Ombud or during an investigation by the FAIS Ombud, the complainant institutes proceedings in a court regarding the subject matter of the complaint.

In resolving complaints in terms of the FAIS Act and Rules, the FAIS Ombud acts independently and must be impartial. The FAIS Ombud would normally resolve the complaints through mediation or conciliation and if these methods are not successful in resolving the complaint, the Ombud will issue a determination. The determination is binding and is enforceable just as a judgment of a Court of Law is. There is an appeal process for aggrieved parties.

FSOS Act

A further function of the FAIS Ombud is to resolve complaints in terms of the Financial Services Ombud Schemes Act (Act No. 37 of 2004) (FSOS Act) that are not covered by any of the other voluntary Ombud schemes or where there is uncertainty over jurisdiction.

In terms of the FSOS Act a “complaint” alludes to:

“a complaint by a client relating to any agreement with, or a financial service or product of, a financial institution, and in which it is alleged that the client has suffered or is likely to suffer financial prejudice or damage as a result of the financial institution –

1. Having contravened or failed to comply with a provision of any agreement or the law or of a code of conduct subscribed to by the financial institution;
2. Having wilfully or negligently supplied, or failed to supply, a financial service or a product to the client;
3. Having treated the client unreasonably or inequitably; or
4. Having mal-administered the implementation of an agreement with, or the supply of a financial service or a product to, the client.”

The Ombud may not investigate complaints where the complainant has a net asset value, annual turnover, or annual income of more than R8 million.