AN OMBUD FOR FINANCIAL SERVICES SECTOR
Back on the agenda is the Governments proposed “twin peaks” approach to regulating the financial services industry. The proposal is a single statutory ombuds office in line with the government’s policy document “A safer financial sector to service SA better”. It has been confirmed that this has been commissioned by the National Treasury. This is not the first time the government has considered creating such a body; it attempted to do so in 2003 and was met with dogged resistance by most of the financial services industry who wanted to retain the status quo.
Currently there are a number of dispute resolution structures in place, i.e.
• Pension Funds Adjudicator
• Ombud for financial service providers
• Credit ombud
• Ombudsmen for long-term and short-term insurance
• Ombudsman for banking services
Both the statutory and non-statutory dispute resolution offices are supposed to hand down decisions that are based on ethical considerations and not only the strict letter of the law. There is no evidence on the table to suggest that consumers would be better served by a single complaints structure. Cas Coovadia, managing director of the Banking Association says the industry is not in favour of a single statutory ombud’s office; they cannot fathom the rationale behind such a concept since the various ombuds have performed very well to the benefit of consumers and in promoting sustainable sectors. These voluntary ombuds are funded by the sectors, while a statutory single ombud would have to be funded from the fiscus which would be a waste of taxpayers’ money.
The government in its twin peaks policy document says “international best practice requires the financial sector to provide consumers with speedy and affordable redress when resolving disputes”. The paper also states that “the SA financial services sector is characterized by high and opaque fees and, in some cases, the unfair treatment of customers”.