From CompliNEWS | Financial Service Intelligence Watch
Treasury moves on ombud simplification
The National Treasury has recommended reforms to the financial ombud system which – if implemented – would result in a simpler, consolidated system with only two instead of seven ombuds in the sector. Late last week Treasury published its policy position statement on the reforms, titled ‘A simpler, stronger financial sector ombud system’ together with a media statement. It said an effective financial ombud system helped to underpin consumer confidence in financial services and to enhance financial inclusion for vulnerable and disadvantaged customers. The proposed system would incorporate a new, independent body, the national financial ombud, which would replace six of the seven current schemes. These would be the credit ombud, the ombud for short-term insurance, the ombud for banking services, the ombud for long-term insurance, the JSE ombud and the ombud for financial services providers. A renamed and reformed pension funds adjudicator would become a separate and independent retirement funds ombud with its own board. The Ombud Council and ombud schemes would implement the proposed reforms which would require legislative amendments.
The Treasury noted that there had already been the voluntary amalgamation in consultation with the Ombud Council of four of the industry schemes, namely the credit, banking, long-term insurance and short-term insurance schemes to form a new, streamlined industry scheme, the National Financial Ombud Scheme SA. This amalgamated body began operations on Friday last week after recognition by the Ombud Council. According to a Business Day report, the Treasury said it would be too complex for the consolidated national finance ombud to absorb the work of the retirement fund ombud at this stage, though this was likely in the medium term once the finance ombud was up and running. Also proposed is a modified Ombud Council. The Treasury said the simplification and consolidation of the ombud schemes would result in consistency in terms of visibility and accessibility, the eligibility of complainants, processes, powers and enforceability of decisions. It would also result in improved coverage to reduce jurisdictional gaps and overlaps.