Over­haul of fi­nan­cial sec­tor om­bud sys­tem gets un­der way

Weekend Argus (Saturday Edition) - - FRONT PAGE -

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 con­duct@trea­sury.gov.za. – Staff Re­porter

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