1 March 2024, Johannesburg, South Africa – The newly-formed National Financial Ombud Scheme (NFO) today announced the commencement of operations as a single, one-stop, all-in-one dispute resolution service made up of the four (4) former existing services – the Ombudsman for Banking Services (OBS); the Credit Ombud (CO); the Ombudsman for Long-Term Insurance (OLTI); and the Ombudsman for Short-Term Insurance (OSTI).
The Ombud Council, granted the NFO recognition (under section 194 of the Financial Sector Regulation Act, 9 of 2017 (FSR Act), as an industry ombud scheme on 23 February 2024. Complaints will be accepted from 1 March 2024.
All the services and assistance previously provided to individuals and companies by the previous Ombud schemes, will now be available through the newly established NFO, at no cost to consumers. The amalgamation to form the NFO is expected to leverage the success of their predecessors while providing a streamlined, co-ordinated, and less confusing alternate dispute resolution framework for financial customers.
“The long history of assisting financial customers in their respective sectors to obtain redress for unfair treatment by financial institutions, free of charge and with minimal formality, is a hallmark of the ombud service, consumers have come to expect and value,” says Reana Steyn Ombudsman for Banking Services.
“We believe that both the financial customers and the participants of the scheme will benefit significantly as a result of the new single-entry point process, with the same rules applicable to all types of complaints.”
“In addition, it will be easier to create awareness and educate consumers about the existence and mandate of the single scheme, as opposed to trying to explain the function of four separate schemes,” Steyn adds.
“Other benefits of the new scheme include improved efficiencies at the administrative level and a harnessing of the institutional knowledge, expertise and staff experience of the previous schemes, built up over more than 20 years. Each of the predecessor schemes will operate as a division of the NFO.”
The granting of recognition includes the Ombud Council’s approval of the governing rules of the NFO. Section 214 of the FSR Act provides that, before granting recognition to an industry ombud scheme, the Ombud Council must carry out ‘a public consultation on the scheme’s proposed governing rules’. Consultation began in November 2023 and a comprehensive process was undertaken in order to consider the comments received. Several changes to the scheme’s governing documents were affected as a result.
“The NFO acknowledges the time and contributions made by the numerous participants and stakeholders. As can be expected, the new Rules deviate to varying degrees from those of the four predecessor schemes and we expect an adjustment period, as both the scheme and the participants get used to the new dispensation. The Rules of the NFO Scheme setting out the details of the Scheme’s jurisdiction, functions and operations will be available on the on the NFO’s new website.”
About The Ombud Council
The Ombud Council was established through the Financial Sector (FSR)Regulation Act (2017), Chapter 14. Its objective is to assist financial customers to have access to affordable, effective, independent and fair alternative dispute resolution when they have complaints about financial institutions. This includes complaints that relate to financial products, financial services and services provided by market infrastructures such as exchanges.
The Ombud Council does not handle customer complaints itself but oversees all financial sector ombud schemes, in essence operating as the regulatory authority for ombuds. The Ombud Council will assist complainants with identifying which ombud is responsible for hearing their complaint in cases where the jurisdiction is unclear.
The Ombud Council will promote:
- Accessibility and use of the ombud system
- Cooperation and coordination among ombuds
- Effectiveness of the ombud system – including through imposing common standards of good practice.
According to the Financial Sector Regulation Act, to achieve its objective, the Ombud Council must:
- Recognise industry ombud schemes;
- Promote co-operation between, and co-ordination of, the activities of ombuds schemes;
- Strive to protect the independence and impartiality of ombuds schemes;
- Promote public awareness of ombuds and ombud schemes and the services they provide;
- Take steps to facilitate access by financial customers to appropriate ombuds schemes;
- Publicise ombud schemes, including publicising the kinds of complaints that different ombud schemes deal with;
- Resolve overlaps of the jurisdictional coverage of different ombud schemes;
- Monitor the performance of ombud schemes, including the extent to which they comply with the requirements of the Chapter and specific financial sector laws.
Background to the Formation of the New Scheme
The Ombud Council is mandated by the Financial Sector Regulation Act, 9 of 2017 (FSR Act) to assist in ensuring that financial customers have access to, and are able to use, affordable, effective, independent, and fair alternative dispute resolution processes for complaints about financial institutions in relation to financial products, financial services, and services provided by market infrastructures (section 176 of the FSR Act). To this end, the Ombud Council’s specific statutory functions include promoting co-operation between, and co-ordination of the activities of ombuds; and to resolve overlaps of the jurisdictional coverage of different ombud schemes. The Ombud Council granted recognition under the FSR Act in May, 2022 to the following four industry ombud schemes (“the Predecessor Schemes”), which had previously operated in terms of the repealed Financial Sector Ombud Schemes Act, 2004: • The Credit Ombud Association • The Ombudsman for Banking Services • The Ombudsman for Long-term Insurance • The Ombudsman for Short-term Insurance.
Rationale for Amalgamation of the Predecessor Schemes
In 2021, the National Treasury and the Financial Sector Conduct Authority mandated the World Bank Group to carry out a diagnostic review of the South African financial ombud system. The World Bank published the findings of its review and proposed substantive reforms to the ombud system in its report titled “South Africa: Financial Ombud System Diagnostic” (June 2021). The report noted the fragmentation of the current ombud system, and one of its key recommendations was to consolidate the ombud system into a new single ombud scheme, independent of both industry and government, to cover the whole of the financial sector (including credit but excluding retirement funds until a later stage).
Following indications from the National Treasury that it supported the recommended broader consolidation of the ombud system proposed in the World Bank review, the four Predecessor Schemes proactively and voluntarily embarked on an amalgamation exercise in anticipation of this reform.
Approximately three years of work on the project to merge and align their operations and processes into a single new industry ombud scheme, culminated in the registration of a new non-profit company, titled the National Financial Ombud Scheme South Africa NPC.
The Ombud Council also strongly supported this recommendation and has worked with the amalgamation project team to support and facilitate the establishment of the NFO, which fully aligns with the Council’s objectives and understanding of the policy direction.
How to Log a Complaint with the new NFO?
It is important that the proper protocol is followed when lodging a complaint. A formal, complaint can be lodged directly with the financial institution/participant and directed to their dispute resolution department, if any. During this process, it is important to ask for a complaint reference number, if they have this in place. Complainants also need to allow the institution 20 working days in to respond to their complaint.
The NFO will be available to assist consumers who are unable to log their complaints themselves and will forward such complaints to the participants.
How to Contact The NFO?
The NFO staff are available to assist with enquiries and we encourage complainants to log complaints through our online and telephonic services.
Complaints can be submitted in one of the following ways:
New physical address:
- Johannesburg: 110 Oxford Road, Houghton Estate, Rosebank, 2198.
- Cape Town: Claremont Central Building, 6th Floor, 6 Vineyard Road, Claremont, 7700, Cape Town.
For any queries or assistance, consumers can call the NFO office on 0860 800 900.
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