Financial watchdog numbers need to be reined in

THE financial services sector has too many ombudsmen and some rationalisation is required, according to Treasury deputy directorgeneral Ismail Momoniat.

He was speaking yesterday on the sidelines of a public hearing on the draft Financial Sector Regulation Bill organised by Parliament’s standing committee on finance.

There is a need for coordination between the different bodies, and their governance processes could be improved, according to Mr Momoniat.

Some ombudsmen had been effective as an alternative disputeresolution mechanism and played an important role in the enforcement of market regulations.

There are ombudsmen for longterm insurance, banking services, short-term insurance, credit, and financial advisory and intermediary services. There is also a pensions fund adjudicator.

The draft bill aimed to create two pillars of regulation of financial services — prudential and marketconduct regulation that would traverse all types of financial institutions, he said.

The draft bill also strengthened the role of the ombudsman’s council by empowering it to set rules for the governance and other procedures of ombudsmen including complaints handling.

Katherine Gibson, Treasury chief director of financial market conduct, said the provisions aimed at ensuring ombudsmen met customers’ needs and expectations.

Ombudsmen bodies opposed too much standardisation, as they saw this as an encroachment on their independence. The nonstatutory bodies made a submission to the committee in which they appealed for technical amendments to the bill that recognised the way they were currently constituted and operated.

The Association for Savings and Investment SA argued in a written submission on the bill that its provisions dealing with the reporting obligations on significant owners of financial assets were too broad and conflated the principles of control and influence.

Congress of South African Trade Unions parliamentary officer Matthew Parks urged that the bill provide for greater protection for consumers, as well as broaden government oversight and intervention capacities in the financial sector. The union federation raised the issue of “exorbitant” bank charges and interest rates.