THE office of the Ombud for Financial Services Providers saysit has dealt with 25percent more complaints in 2009-10 compared to its previous financial year.
The ombud received 7647 complaints during the financial year ended March 31 2010, according to its annual report released on Friday.
"This reflects a 24,8percent increase in complaints falling within the jurisdiction of the office, accounting for 2653 out of the total number of 7647 complaints received," the ombud's office said in a statement.
The FAIS ombud resolves disputes between financial services providers and their clients and is limited to claims of not more than R800000.
Ombud Noluntu Bam called on businesses to apply constitutional and moral guidelines to their operations, in addition to complying with the law.
"While we accept that financial institutions have as their primary goal the making of a profit, we subscribe to the principle that ethical and moral practices are sustainable and by no means incompatible with business practices."
She said the industry still had some way to go in ensuring appropriate advice was given and to avoid designing products that only benefited the institution, not the client.
In the past financial year, the number of cases settled that involved monetary compensation dropped slightly from 616 the previous year to 580. Resolved cases showed a marked drop in value, declining by 27percent from R32,9million to R24,09million.
The ombud's office said it was too early to draw definite conclusions on why the value of compensation had dropped.
"However, there are a number of factors which may have contributed, namely the effects of the recession, increased compliance by the financial services industry and a general increase in the complexity of the complaints e.g. investment scams (toxic investments)."
In toxic investment-related complaints, the recovery rate of the capital investment and any other dues to the consumer is extremely low. The office said it received many investment-related complaints, but after investigation it was often found that the complaint was about the investment's performance, which was not necessarily guaranteed, rather than non-compliance with the FAIS Act.
"The rules on proceedings of this office preclude us from entertaining such complaints." The ombud drew attention to the case of Sebastian Chetty which it said highlighted its importance.
In this case, the insurer did not fall under an existing ombud. Chetty complained that Orange Insurance had not paid his insurance claim for vehicle repairs, although it had approved that the work be done. Orange Insurance was not a subscriber to the short-term insurance ombud scheme, but Chetty was able to take his complaint to the FAIS ombud.
That was because the Act gave the FAIS ombud power to deal with complaints against financial services providers that do not fall under an existing ombud scheme.
Fais Ombud gets more complaints
THE office of the Ombud for Financial Services Providers saysit has dealt with 25percent more complaints in 2009-10 compared to its previous financial year.
The ombud received 7647 complaints during the financial year ended March 31 2010, according to its annual report released on Friday.
"This reflects a 24,8percent increase in complaints falling within the jurisdiction of the office, accounting for 2653 out of the total number of 7647 complaints received," the ombud's office said in a statement.
The FAIS ombud resolves disputes between financial services providers and their clients and is limited to claims of not more than R800000.
Ombud Noluntu Bam called on businesses to apply constitutional and moral guidelines to their operations, in addition to complying with the law.
"While we accept that financial institutions have as their primary goal the making of a profit, we subscribe to the principle that ethical and moral practices are sustainable and by no means incompatible with business practices."
She said the industry still had some way to go in ensuring appropriate advice was given and to avoid designing products that only benefited the institution, not the client.
In the past financial year, the number of cases settled that involved monetary compensation dropped slightly from 616 the previous year to 580. Resolved cases showed a marked drop in value, declining by 27percent from R32,9million to R24,09million.
The ombud's office said it was too early to draw definite conclusions on why the value of compensation had dropped.
"However, there are a number of factors which may have contributed, namely the effects of the recession, increased compliance by the financial services industry and a general increase in the complexity of the complaints e.g. investment scams (toxic investments)."
In toxic investment-related complaints, the recovery rate of the capital investment and any other dues to the consumer is extremely low. The office said it received many investment-related complaints, but after investigation it was often found that the complaint was about the investment's performance, which was not necessarily guaranteed, rather than non-compliance with the FAIS Act.
"The rules on proceedings of this office preclude us from entertaining such complaints." The ombud drew attention to the case of Sebastian Chetty which it said highlighted its importance.
In this case, the insurer did not fall under an existing ombud. Chetty complained that Orange Insurance had not paid his insurance claim for vehicle repairs, although it had approved that the work be done. Orange Insurance was not a subscriber to the short-term insurance ombud scheme, but Chetty was able to take his complaint to the FAIS ombud.
That was because the Act gave the FAIS ombud power to deal with complaints against financial services providers that do not fall under an existing ombud scheme.
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