The office of the FAIS Ombud published its Annual Report for the financial year end of 2015/2016. The report sets out the mandate of the Ombud as well as statistics of the complaints received during the financial year.
During the financial year of 2015/2016, the office of the FAIS Ombud received the highest number of complaints since its inception. A total of 9 891 complaints were received, where 4 263 of that total were justiciable complaints. The financial products where the most complaints were received are:
- Short-Term Insurance products – 3 161;
- Long-Term Insurance products – 2 627;
- Non-FAIS products – 1 920;
- Investment products – 1307 of the total complaints received.
The areas from which the most complaints were received were identified as follows:
- Gauteng – 3 288
- KwaZulu-Natal – 1 268
- Western Cape – 1 233
The FAIS Ombud refers complaints to other forums. During the 2015/2016 financial year, most of the complaints were referred to Financial Services Providers, the Ombud for Short and Long Term Insurance and the Financial Services Board.
The Ombud also reported that of the total number of complaints received, 753 were settled and 2 704 were dismissed. The dismissed cases included matters where a complaint was investigated and the FSP could defend itself by providing the Ombud with sufficient documentation including records of advice and all correspondence with the client. Therefore, it is imperative that advisors keep records of all client correspondence as this will assist the FSP in proving that the client was informed at all times and therefore made informed decisions. Proper record keeping by FSPs is the best method to protect against clients who do not have valid or justiciable complaints.
A total number of 24 determinations were issued in the 2015/2016 financial year. Half of these determinations tackled non-compliance with the FAIS Act for short-term insurance products. The Ombud also highlighted the misconception in the financial services industry that the FAIS Act does not apply to financial services providers in the short-term insurance business. The report emphasises that this is far removed from the truth and that all FSPs should embrace the spirit of the FAIS Act in order to build a credible and sustainable business.
This report carries the message that as advisors, it is important to always comply with the FAIS Act and what it stands for. This should not only be done because it is law, but also because it is the right thing to do – to ensure that clients are fully informed, educated and appropriate solutions recommended which are likely to satisfy their financial needs and objectives.