The Office of the Financial Advisory and Intermediary Services (Fais) Ombud is encountering significant difficulties in finalising the backlog of property syndication complaints it has received.
It did not receive any new property syndication complaints in the year to end-March.
The backlog relates to complaints lodged several years ago about schemes promoted and marketed by companies such as Sharemax and Highveld Syndication.
Assistant Ombud Thobile Masina said on Friday that one of the challenges relates to inconsistencies in the decisions it had received from the Financial Services Tribunal, previously called the Financial Services Board (FSB) appeal board.
She said the Office of the Fais Ombud had previously taken one of the decisions of the tribunal on review in the high court, but the court ruled that it was unable to assist because the tribunal is “part of your own entity”. The court’s view was that this was something the ombud needed to resolve with the tribunal and the Financial Services Conduct Authority (FSCA).
One body, different decisions
Masina said this has resulted in a situation where the tribunal has taken different decisions and when dealing with complaints the Fais ombud does not know which decision a tribunal member will rely on.
“So the respondents [to complaints] rely on the decisions that favour them. We rely on the decisions that favour us. That is part of the reason why we can’t resolve those complaints informally and they have to go to determination,” she said.
Masina admitted the Office of the Fais ombud is “between a rock and a hard place” and is getting legal advice on what steps it can take, given the previous decision taken by the high court.
“What can we actually do, because we also cannot keep holding those matters [complaints] in abeyance? We also want to see them come to some conclusion,” she said.
The backlog of property syndication complaints was reduced to 1 147 at end-March this year, from the about 2 000 complaints that were shelved in 2013.
These complaints were shelved, pending the outcome of an appeal that was lodged relating to the determinations of the Fais ombud in the Siegrist and Bekker complaints, which held the directors of Sharemax Investments jointly liable for the losses of complainants.
The appeal was decided in April 2015 and the Fais ombud resumed processing complaints involving property syndications with due regard to the then-FSB Appeal Board decision.
The outcome of the appeal meant the Fais ombud could only issue determinations against the broker or financial advisor and could not place liability at the door of the directors of the property syndication schemes.
Masina said the office of the ombud is still drafting determinations to property syndication complaints, but has not issued them because of the recent decision by the tribunal.
The ombud’s annual report for the 2018/2019 financial year reveals that new complaints received by the office decreased by 8.7% to 9 323 complaints from the 10 211 new complaints received in the previous year.
The office resolved 9 954 complaints in the year, 6.8% more than the total amount of complaints received during the financial year, with orders to the value of R66.6 million in favour of complainants in settled or determined cases.
Ombud Advocate Nonku Tshombe said on Friday at the launch of the office’s annual report that there are consumers of financial products who do not know about the Office of the Fais Ombud.
Tshombe said it intends to intensify efforts to create greater awareness of the office so that consumers of financial products know where to take their complaints.
Of the total 9 323 complaints received in the financial year, 72% were received from only three provinces –Gauteng, the Western Cape and KwaZulu-Natal.
Tshombe said the number of complaints coming out of provinces that are more rural are not commensurate with the population numbers and the consumers of financial products in those provinces.
“It’s time to give attention to the provinces that we have not seen complaining,” she said.