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Consumer Affairs
Sunday, June 1, 2008
High body count

The idea of the office of Ombudsman originated in Sweden, but did not spread to other countries until the 20th century, when it was adopted in other Scandinavian countries. In the early 1960s, various Commonwealth and other, mainly European countries, established such an office. By mid 1983, there were about 21 countries with Ombudsman offices at national level and about six other countries with Ombudsman offices at provincial, state or regional levels.

Some of the main features of the development of consumer protection measures in South Africa are as follows:
19th April 1984 – The Small Claims Court Act
1985 – Ombudsman for Long-Term Insurance
1st August 1988 - Ombudsman for Short-Term Insurance
1st October 1995 – The Public Protector
1996 – Medical Ombudsman (later disbanded)
1997 - Banking Ombudsman
1st January 1998 – The office of the Pension Funds Adjudicator
15th September 1998 – Short-Term Insurance Act/Long-Term Insurance Act
20th October 1998 – The Competition Act
1999 – Medical Ombudsman abolished
15th November 2002 – The Financial Advisory and Intermediary Services Act
2002 - Office of the Ombud for Financial Service Providers
February 2004 - Ombudsman for Credit Information
30th September 2004 – The Policyholder Protection Rules.
9th February 2005 - The Financial Services Ombud Schemes Act 2004
2005 – The National Credit Act
Currently in the pipeline:
• The Consumer Protection Bill
• The Second Hand Goods Bill

There are six ombudsman officiating in the financial services sector: two statutory (1-2) and four voluntary (3-6):

Statutory Ombudsman

The Office of the Ombudsman was established in 1985 to help consumers resolve disputes with life insurers out-of-court, quickly and in an informal manner. Services are rendered completely free of charge to the consumer and rulings are legally binding on insurers.

1] The Ombud for Financial Service Providers

The objective of the Ombud for Financial Service Providers (the FAIS Ombud) is to consider and dispose of complaints by clients against financial services providers in the terms of the FAIS Act. It is enabled to protect consumers from bad or inappropriate advice in connection of defined financial services, and as established as a result of Section 20 of the Financial Advisory and Intermediary Services Act 2002 (FAIS).
Additional powers were defined in the Financial Services Ombud Schemes Act 2004. Charles Pillai is the present office bearer. www.faisombud.co.za Contact (012) 470 9080 and sharecall 0860 324 766 info@faisombud.co.za

2] The Pension Funds Adjudicator

The purpose of the Pension Funds Adjudicator is to resolve disputes in a procedurally fair, economical and expeditious manner. The Adjudicator’s office investigates and determines complaints of abuse of power, maladministration, disputes of fact or law and employer dereliction of duty in respect of pension funds. The office of the PFA was established with effect from 1st January 1998 to investigate and decide complaints lodged in terms of the Pension Funds Act. The word Pension Fund in the Act includes a Provident Fund and Retirement Annuity Fund.
In order to lodge a complaint, a complainant must be a member or former member of a pension fund, a beneficiary or former beneficiary of a fund, or an employer who participates in a fund. In addition the Board of Management of a fund, or a member of the board can also lodge a complaint.
The present PFA is Mamodupi Mohlala based in Cape Town, (021) 674 0209
Visit www.fsb.co.za/ and select ‘Useful Links’ in the left panel to reach the PFA site. Email to: enquiries@pfa.org.za There is also a Johannesburg office: (011) 884 8454

Voluntary Ombudsmen

3] Ombudsman for Long-Term Insurance

The office for the Ombudsman for long-term insurance was established in 1985. Its function is to mediate in disputes between insurers and policyholders, providing individuals with a cost-free recourse to have their complaints aired and resolved. Its determinations are binding on member offices, of which 97% of registered long-term insurance companies in terms of assets subscribe to the scheme. The present Ombudsman is Brian Galgut www.ombud.co.za, Sharecall 0860 662 837 or phone (021) 657 5000 info@ombud.co.za

4] Ombudsman for Short-Term Insurance

The Ombudsman for Short-Term Insurance was established on 1st August 1988 when Judge WHR Schreiner SC was appointed. Its mission is ‘to resolve short-term insurance complaints fairly, efficiently and impartially.’ Until the end of 2000 this industry created office was controlled and administered by the SA Insurance Association (the member body of registered short-term insurance companies). It was funded by member companies. From the beginning of 2001 control of the Ombudsman was transferred from the SAIA to an independent body, the Council of the Ombudsman for Short-Term Insurance. Its rulings now have the force of law and are legally binding on member companies as if determined by a court of law. The services are free to individual members of the public. From 1st May 2006 its jurisdiction was extended to commercial matters. www.osti.co.za Its present Ombudsman is Brian Martin, appointed 1st January 2007. Contact (011) 726 8900 or email to: info@osti.co.za

5] Ombudsman for Banking Services

The ‘Banking Ombudsman’ was originally set up in 1997, and later in May 2000 more formally established as a Section 21 company (not for gain) to provide a better, more independent basis for arbitration. The new office was initially called the Office of the Banking Adjudicator.
The Ombudsman for Banking Services (OBS), as he is now called, resolves individual complaints about banking services and products. It aims to do this impartially, fairly and confidentially.
Further details were reported in Insurance Times & Investments Vol 17.3 June 2004 page 32. www.oba.org.za Advocate Clive Pillay is the present Ombudsman for Banking Services (011) 838 0035 or sharecall 0860 800 900
Footnote: Banking Council South Africa was established in March 1998, replacing the Council of South African Banks, which itself had been formed in March 1992 out of four bank related associations. It is not a complaints body, but a bank representative body, similar in function to the SA Insurance Association (for short-term insurance companies) or the Life Offices’ Association (for Long-term insurance companies).

6] The Credit Information Ombud

The office of the Credit Information Ombud was established in 2001. Its purpose is to resolve complaints from consumers and businesses that are negatively impacted by credit information.
As with all Ombud schemes its task is to act honestly, independently and fairly, balancing the rights of both credit receivers and credit grantors. All matters are treated in confidence.
Another responsibility for the office is to act as an educator for the public in matters pertaining to the credit information industry.
Any consumer or business that is negatively affected by credit information may approach the office for assistance. The service is free. www.creditombud.org.za The present Credit Information Ombud is Manie van Schalkwyk who started the office in February 2004.
Contact number is 0861 662 837

Other consumer-related bodies

The Public Protector

The Public Protector receives and investigates complaints from the public against government agencies or officials, and has the power to recommend corrective action and to issue reports.
The Public Protector’s services are free and available to all, and any complainant will, wherever possible, remain confidential.
The Public Protector is appointed by the President on the recommendation of the National Assembly in terms of the provisions of the interim Constitutions of 1993, for a non-renewable period of seven years. The office was confirmed as an institution that strengthens constitutional democracy by the final Constitution, 1996. The office of the Public Protector came into being on 1 October 1995.
The Public Protector is subject only to the Constitution and the law and is independent of government and any political party. No person or organ of state may interfere with the functioning of the Public Protector’s office. Additional powers are provided by the Public Protector Act 1994.
Adv Mushwana was appointed as the second Public Protector on 15th October 2002 in terms of ch 9 of the Constitution 1996.
National contact (012) 366 7000 Toll free 0800 112040 (Also regional officers in all nine provinces).

Financial Services Board

The Financial Services Board, based in Pretoria, is the regulatory body responsible for administering a range of financial services Acts of Parliament, most notably the following:
• Short-Term Insurance Act 1998
• Long-Term Insurance Act 1998
• Collective Investment Schemes Control Act 2002
• Financial Advisory and Intermediary Services Act 2002
• Financial Services Ombud Schemes Act 2004

It also handles complaints against businesses as governed by the above laws and a complaint form is available to consumers at www.fsb.co.za

Small Claims Court

The Small Claims Court Act was assented to on 19th April 1984, and came into force 24th August 1985. For further information please refer to Insurance Times & Investments Vol 21.4 May 2008. Also you can visit the Department of Justice and Constitutional Development at www.doj.gov.za, and follow the links.
Policyholder Protection Rules
These were gazetted in terms of the Long-Term and Short-Term Insurance Acts, and came into operation on 30th September 2004. See Insurance Times & Investments Vol 14. 5 June 2001 page 16.

The Financial Advisory and Intermediary Services Act

This Act was passed late 2002 to regulate the rendering of ‘certain’ financial advice and related services to clients. Its principles were discussed in detail in Insurance Times & Investments: see Vol 16.1 February 2003 page 12. The final Bill was analysed in detail in the magazine during July to December 2001.

The Competition Act

This Act was passed in 1998 to provide for the establishment of a Competition Commission responsible for the investigation, control and evaluation of restrictive practices, abuse of dominant position and mergers, and for the establishment of the Competition Tribunal.
The Financial Services Ombud Schemes Act
This 2004 Act was assented to on 9th February 2005 to provide for the recognition of voluntary financial service ombud schemes and lay down a framework for co-ordinating with the two statutory bodies.

The National Credit Act

This 2005 Act initially came into force 1st June 2006, then more bits on 1st September 2006 and the balance on 1st June 2007. See Insurance Times & Investments Vol 20.4 May 2007 page 2 and Vol 20.6 July 2007 page 20, with a summary in Vol 20.7 August 2007 page 10.

Motor Industry Ombudsman of South Africa

The Motor Industry Ombudsman or MIO is probably the least independent of the Ombudsman, to my understanding. Just a scan of its latest Annual Report (a four-page leaflet) indicates bias in the tone. Of the brief complaints noted all are used to illustrate misconception on the part of the consumer, rather than reporting on any determinations or wrong-doing on the part of the industry. The MIO services are free of charge.
The Motor Industry Ombudsman is, in essence, an autonomous institution that acts as a referee between the motor industry and the motorist. www.miosa.co.za (012) 841 2842, or email to: mi.ombudsman@netactive.co.za

Medical Ombudsman

Medical Ombudsman was started in 1996 only to be abolished in June 1999 by MASA due to ‘lack of funding’. Pardon me, but I thought doctors had lots of money. By Nigel Benetton

Copyright © Insurance Times and Investments® Vol:21.5 1st June, 2008
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