Ripped off? Time to call the ombud
HOW AND WHY: TIPS ON ENFORCING YOUR INVESTOR RIGHTS
The office of the ombud is there to help when financial advisors misbehave, but there are a few things you must know first.
The Financial Advisory and Intermediary Services (Fais) Act is one of the most important pieces of investor-protection legislation as it determines who can give financial advice, how that advice can be given, and what it must entail.
The Act also established the office of the Fais Ombud. This is an independent body that consumers can approach when they believe they have suffered some prejudice as a result of financial advice.
Potential pitfalls
This might include misrepresenting products, not disclosing fees, failing to keep proper records, not protecting personal information, not disclosing conflicts of interest, recommending products that are not approved by the Financial Services Board (FSB), or failing to maintain a proper separation of funds. More seriously, it can also include fraud and misappropriation of funds.
The ombud is also empowered to act against unauthorised financial advisors.
To approach the ombud, you must meet certain requirements. You must first try resolve the matter with the person or company you are complaining about. Only if that fails, after six weeks can you go to the ombud. And you must do so within six months of receiving the final response.
If you only became aware of the issue sometime after it had taken place, you have three years from the time you became aware of the damage.
Thirdly, you can’t approach the ombud if you have already lodged the matter in court. The ombud can, however, refer matters directly to the courts.
Finally, ombud complaints are limited to R800 000.
Importantly, the complaint cannot relate to the performance of a financial product, unless that performance was guaranteed or the performance was so deficient it points to misrepresentation, negligence or maladministration.
The ombud must always attempt to mediate to find a solution acceptable to everyone. If, however, one or more of the parties do not agree, they will have to give their reasons in writing before a final determination.
The ombud can make a monetary award for any losses and can order a financial services provider representative to take the necessary steps to resolve the matter.
The ombud must refer to the FSB any complaint that may require regulatory action, like withdrawing a license.
Appeal process
Any appeal must be made directly to the ombud within one month of the ruling. If granted, the matter will be referred to the FSB Appeal Board.
If not, the aggrieved party can apply directly to the chairperson of the FSB Appeal Board within one month, with the ombud’s knowledge.
If after all of this, parties may approach the high court.