The New National Financial Ombud Scheme: Comments on the Regulatory Framework

Abstract

The Financial Sector Regulation Act 9 of 2017 created the foundation for the establishment of a new ombud scheme structure, with the Ombud Council (OC) providing the oversight function as part of the new structure. The National Financial Ombud Scheme (NFO) was established on 1 March 2024, amalgamating most of the predecessor ombud schemes, although the Ombud for Financial Services Providers (FAIS Ombud) and the Pension Funds Adjudicator (PFA) remain operational. The establishment of the NFO resolves some of the fragmentation that was evident in the ombud-scheme system operating in the financial sector. The NFO Rules include the essential elements to allow the NFO to operate effectively. However, the NFO Rules are lacking in detail. The assumption is that this allows for flexibility to allow processes to change if the implementation of such rules proves ineffective. This article provides an analysis of the NFO Rules to determine their legal efficacy. The conclusion is that it makes sense to allow for some flexibility and not include the detail in the NFO Rules. Nevertheless, there must be consistency in how ombud schemes resolve complaints. This article suggests such consistency should be found in having core values (or principles) that all ombud schemes in the financial sector must follow when they develop their rules, decide to amend existing rules and implement rules as part of the dispute-resolution process. Consistency is arguably achieved if all ombud schemes adopt the same core values (or principles) for dispute-resolution processes.