Dispute Resolution Procedures At The National Financial Ombud

The National Financial Ombud Scheme ("NFO"), an independent body responsible for resolving consumer complaints about South African financial institutions, commenced operations on 1 March 2024. The NFO has absorbed four separate and independent bodies into one, namely the erstwhile Ombudsman for Banking Services, the Credit Ombud, the Ombudsman for Long-Term Insurance, and the Ombudsman for Short-Term Insurance.

The NFO was granted recognition by the Ombud Council in terms of the Financial Sector Regulation Act 9 of 2017. The NFO is mandated to ensure that consumers of financial institutions in South Africa have access to free, independent and fair alternative dispute resolution processes when encountering disputes with their service providers. The establishment of the NFO resulted from a World Bank Group review of the South African financial ombud system in 2021, which highlighted a fragmented system and recommended consolidation into a single ombud. The review envisaged an ombud scheme independent of both government and the industry, catering for the entire financial sector. Hence, the formation of the NFO. The four independent bodies absorbed to form the NFO will continue to operate as separate divisions within the scheme. The NFO's purpose is to continue providing the services of the previous four bodies but in a more streamlined and coordinated fashion. The NFO Rules govern the NFO. We published an earlier article about the NFO in March 2024, you can read more here.

The complaints procedure is designed to be straightforward and, more importantly, free of charge to the complainant, ensuring that financial disputes can be resolved without adding to the financial burden.

Complaints and Dispute Resolution Procedures at the NFO

The following steps must be followed when lodging a complaint with the NFO:

• Before approaching the NFO:
  1. Before approaching the NFO, a complainant must first file a complaint with the Services Provider.
  2. Should the issue remain unresolved thereafter, a complainant may lodge a complaint with the NFO.
• Complaining to the NFO:
  1. A complainant may lodge a complaint with the NFO by completing the online form (available on the NFO's website) or by submitting the complaint by email, facsimile, post, telephone, or walk-in at the office located in Houghton, Gauteng.
  2. Complainants must provide the NFO with the following information:
     1. name of participant (i.e. the service provider in respect of whom the complaint is lodged);
     2. account or policy number;
     3. full contact details;
     4. factual summary of the complaint; and
     5. copies of all relevant correspondence/supporting documents referred to in the complaint.
• What happens after a complaint has been made?
  1. The NFO will provide a letter of acknowledgement to the complainant.
  2. If the complainant has not first lodged a complaint with the service provider, the NFO will ask the service provider to submit a written response within 21 working days. If the complainant did initially lodge a complaint with the service provider, the service provider will be afforded 15 working days to submit a written response to the complaint.
  3. Once a response is received, the NFO will invite comments from the complainant.
  4. Once the NFO completes its investigation, it may issue a ruling or make a recommendation.
• Can a party to the dispute appeal the outcome?
  1. If the matter is unresolved after the NFO has completed its assessment/evaluation, the NFO may refer it to mediation/conciliation. Alternatively, the NFO may further investigate the matter or provide a recommendation.
  2. If a party is unsatisfied with the recommendation of the NFO, the NFO may issue a provisional ruling.
  3. If a party is unsatisfied with the NFO's provisional ruling, the NFO may issue a final ruling.
  4. If a party is unsatisfied with the final ruling of the NFO, the unsatisfied party may apply for leave to appeal the ruling to the Appeal Tribunal, established under Rule 10 of the NFO Rules, for final determination within 30 days of the date of the final ruling.
• Can a representative make the complaint?

A written mandate must be submitted to the NFO for a representative to make a complaint on another's behalf.

• Additional points to be aware of:
  1. The NFO may, at any stage, request further information or comment from either the complainant or the service provider.
  2. The NFO may dismiss a complaint without further consideration of its merits or at any stage of the complaint handling process and must provide reasons for the dismissal in accordance with Rule 9.2.1 of the NFO Rules.
  3. No prohibition is placed on the parties to resolve the dispute amongst themselves.
  4. A complainant may be either a natural or a juristic person.

The NFO, with its newly elected Head Ombud, Reana Steyn, seeks to be "the one-stop, all-in-one dispute resolution service" in the financial sector in South Africa.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.