Overhaul of financial sector ombud system gets under way
NATIONAL Treasury has published a policy document, “A known and trusted ombud system for all”, for public comment. It forms part of the shift towards the so-called Twin Peaks regulation model, the two “peaks” are a prudential authority and a market conduct authority.
Treasury says the reforms aim to promote empowered consumers, who can hold their financial institutions to account for poor service or broken commitments. Where complaints are not resolved fairly by the institution concerned, an impartial third party should be available to resolve the dispute.
Treasury’s policy document proposes improvements to the alternative- dispute resolution process provided through the ombud system. There are six financial-sector ombud schemes, each providing a platform that is free to consumers and external to financial institutions. They are the Ombud for Financial Services Providers, the ombudsmen for Banking Services and for Long- and Short-term Insurance, the Tax Ombud, and the Pension Funds Adjudicator.
Treasury says there are many differences in how these schemes were established and how they operate. Some were established through statute, while others were established through industry initiative.
“While the system has provided vital assistance in resolving the disputes of customers, it has been identified that there are weaknesses, inconsistencies and inefficiencies in its operation that may be hampering the achievement of good customer outcomes,” Treasury says.
The Financial Sector Regulation Act takes the first step towards addressing the shortcomings in the ombud system. The Act establishes an Ombud Council as a statutory body, which, it is expected, will be established alongside the prudential and market conduct authorities.
The proposed reforms to the ombud system include:
• Enhancing the existing hybrid model of statutory and industry ombuds;
• Moving towards a centralised model with a single statutory ombud scheme; and
• Moving towards exclusively industry-established ombuds with strong oversight by the Ombud Council.
Comments on the proposals are invited until November 30 and can be sent to market firstname.lastname@example.org. – Staff Reporter