It’s been one year since the National Financial Ombud Scheme (NFO) was formed from the amalgamation of the Ombudsman for Banking Services (OBS), the Credit Ombud (CO), the Ombudsman for Long-Term Insurance (OLTI), and the Ombudsman for Short-Term Insurance (OSTI).
Since its inception on 1 March 2024, the NFO has dealt with 40 859 cases, with the total amount of R416,02-million claimed and refunded to consumers.
“This is a significant milestone in terms of recovering funds on behalf of consumers and is a testament to the NFO’s dedication to protecting consumer rights and its commitment to ensuring fairness and effective dispute resolution in the financial services industry,” says NFO head Ombud Reana Steyn.
In addition, the NFO received and dealt with 125 741 emails as well as 25 162 WhatsApp calls and messages through its contact centre, which also received a total of 127 019 telephone calls in its first year.
“We have had an important impact on the lives of thousands of South Africans by offering a vital safety net and recourse mechanism following any form of maladministration, disputes with the financial service providers or a significant financial loss,” says Steyn. “Few realise how important it is to have access to this kind of assistance until they become a victim of fraud, or suffer a loss.”
The primary purpose of an Ombud such as the NFO is to settle disputes between consumers and companies, she adds.
This is particularly important within the South African financial sector as many consumers rely on the financial sector as a safety net to insure their most valuable assets, to purchase those assets, or to fund other living expenses through loans or store accounts. Life insurance, funeral cover and disability cover also play an extremely important role in protecting the livelihood of many.
However, interactions between parties often turn into disputes, especially at claims stage or when the parties disagree over the amounts due, which is when the NFO steps in.
By providing free alternative dispute resolution, the NFO ensures that consumers are protected and empowered in their financial journeys, while ensuring the financial institutions also receive fair treatment.
Steyn warns the public that the threat landscape within the banking and credit sector is growing as technology becomes more advanced and accessible.
“The NFO is preparing itself for the increase in complaints it will face over the years as the public grapples with technology, constant new fraudulent schemes and irresponsible financial institutions.
“Increased complexity in the insurance cover and claims, ranging from household and vehicle insurance to life and disability cover, could similarly lead to an increase in complaints lodged with the NFO.
“While we urge the public to be increasingly cautious of the challenges and threats, they face on all fronts when it comes to financial services, they need to be aware of the important role that the NFO plays in offering key protection,” Steyn adds.
Focus on vulnerable consumers
When it comes to consumers, vulnerability includes many factors that impact decision-making or financial management. Life events which include significant personal hardships such as bereavement, unemployment, or sudden financial loss, could impact consumers of financial services.
The NFO aims to be alert to vulnerability on the part of consumers and in the appropriate situation, bring this to the attention of the financial institution when dealing with a complaint. Steyn also points out that scammers and fraudsters are increasingly using technology to impersonate representatives from financial institutions. They then urge and eventually convince vulnerable consumers to perform essential actions to their detriment.
“We urge the public to ensure they are informed about their rights and obligations in terms of their financial contracts, but if they believe that their situation caused them to fall into the vulnerable category, they must alert the NFO. They also need to be aware that the NFO deals with all complaints in a fair and equitable manner,” says Steyn.