Ombud to slash backlog

HILL TO CLIMB: 1 114 PROPERTY SYNDICATION COMPLAINTS AWAITING

Office needs date for appeal against judgment that ‘destroys mandate’.

Acting Financial Advisory & Intermediary Services (Fais) ombud Nonku Tshombe aspires to eradicate the backlog of 1 114 property syndication complaints by the end of March 2022.

However, the Fais ombud’s office has been hamstrung by a number of issues in dealing with these complaints, including a High Court in Pretoria decision that the office is appealing.

Two parties – close corporation and licensed financial services provider (FSP) CS Brokers, and FSP and broker Emile Storm – successfully applied to the court earlier this year to review and set aside a decision by the Fais ombud not to decline to entertain a complaint.

The application was brought in terms of Section 27 (3) (c) of the Fais Act in terms of which “the ombud may on reasonable grounds determine that it is more appropriate that the complaint be dealt [with] by a court or through any other available dispute resolution process and decline to entertain the complaint”.

In this instance the Fais ombud had accepted the complaint against CS Brokers.

Judge Hans Fabricius ordered this year the decision of the Fais ombud be substituted with the following decision: “This office declines to entertain the complaint in terms of Section 27 (3) (c) in that it would be more appropriate for the complaint to be dealt with by a court or any other dispute resolution process.”

Tshombe said on Friday the Fais ombud’s office has appealed this judgment and was waiting for a Supreme Court of Appeal date for it to be heard. She added that if the Fais ombud’s office allowed this order to stand, it would destroy its mandate to provide free, quick and informal resolution to disputes and complaints.

If a complaint is heard by a court instead of the ombud, consumers will not have a free dispute resolution process but, instead, face an expensive and potentially lengthy court process.

Many of the outstanding property syndication complaints made to the ombud’s office relate to Sharemax Investments and the Highveld Syndication schemes.

Sharemax collapsed in 2010 after the findings of a registrar of banks investigation that its funding model contravened the Banks Act became public knowledge.

The registrar of banks laid criminal charges against Sharemax for alleged contraventions of the Act in March 2012. About 33 000 investors invested an estimated R5 billion in Sharemax’s property syndication schemes.

Tshombe admitted the time it was taking for the ombud’s office to finalise the property syndication complaints “is an undesirable state of affairs”. This was the reason the ombud’s office has, for the first time during the 2019-2020 financial year, included the resolution of property syndication complaints as a strategic outcome and committed to the reduction of the backlog. –

It is an undesirable state of affairs