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The National Financial Ombud Scheme has put almost half a billion rand back in consumers’ pockets in its first year after the amalgamation of the Ombudsman for Banking Services, the Credit Ombud, the Ombudsman for Long-Term Insurance and the Ombudsman for Short-Term Insurance.
The amalgamation marked a significant moment for the financial services sector in South Africa as consumers and companies in the financial services sector gained access to a single body that manages all complaints and disputes in the financial sector fairly and equitably.
Reana Steyn, head ombud at the National Financial Ombud Scheme (NFO), says the NFO made a significant impact since its amalgamation one year ago. “We 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.
“Few people realise how important it is to have access to this kind of assistance until they become a victim of fraud or suffer a loss.”
Steyn says 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.
The NFO also received and dealt with 125 741 emails as well as 25 162 WhatsApp calls and messages through its contact centre, that also received a total of 127 019 telephone calls in its first year.
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Steyn points out that the primary purpose of an Ombud such as the NFO is to settle disputes between consumers and companies. “This is particularly important in the South African financial sector as many consumers rely on it as a safety net to insure their most valuable assets, buy those assets, or 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 consumers. However, interactions between parties often turn into disputes, especially at the claims stage or when the parties disagree over the amounts due, which is when the NFO steps in to make a real difference.”
She says as we move into the second quarter of the year, many South Africans face financial challenges and confusion regarding their financial rights and obligations. “This difficulty is heightened by the financial pressure that typically arise at the beginning of the year, often leading to over-indebtedness and complications linked to credit agreements.
“Fortunately, the NFO can assist consumers and is committed to promoting financial fairness, transparency and justice in banking, credit and insurance related matters. By providing free alternative dispute resolution, the NFO ensures that consumers are protected and empowered in their financial journeys, whilst also ensuring the financial institutions receive the same fair treatment.”
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Steyn warns consumers that the threat landscape in 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 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 must be aware of the important role that the NFO plays in offering key protection.”
When it comes to vulnerable consumers, Steyn says vulnerability includes many factors that affect decision-making or financial management. “Life events which include significant personal hardships such as bereavement, unemployment, or sudden financial loss, could affect consumers of financial services.
“The NFO will continue to be alert to vulnerability on the part of consumers and in the appropriate situation, bring this to the attention of the financial institution while dealing with a complaint.”
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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 consumers to ensure they are informed about their rights and obligations regarding their financial contracts, but if they believe that their situation caused them to fall into the vulnerable category, they must alert the NFO. They must also be aware that the NFO deals with all complaints in a fair and equitable manner.”
While the main objective of the NFO is to settle disputes arising in the financial services sector and insurance industry, Steyn is confident that the future is bright and that the NFO will play an increasingly important role in South Africa.
“The NFO was established in an environment where South Africans constantly face a complex and uncertain risk environment. It is important to note that the most vulnerable members of society are affected the most when they face a financial loss.
“This is where the NFO makes the biggest difference. The NFO will also continue to champion the cause of consumer financial education and awareness of their rights and obligations in an effort to ensure better outcomes as they face this complex environment.”
Steyn says while the evidence points to the successful groundwork that has been put in place, the hard work continues to ensure that the NFO fulfils its goals to play a pivotal role in the country’s financial services landscape.
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Consumers can contact the NFO through its website or its contact centre (0860 800 900).
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