The creation of the National Financial Ombud Scheme (NFO) in South Africa was a game-changer for the financial services sector, according to the NFO.
It says it brought together 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) into one powerful body.
This move gave consumers and businesses a single place to turn to for fair and equitable solutions to disputes and complaints in the financial world – something that used to be handled separately by these different schemes, it says.
As the NFO celebrates its first birthday, Reana Steyn, the NFO head ombud, looks back on the past year with pride. “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. 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,” says Steyn.
According to the NFO, its main job is to sort out disputes between consumers and financial companies. This is especially crucial in South Africa, where so many people rely on the financial sector as a lifeline – whether it’s insuring their prized possessions, buying assets, or taking out loans and store accounts to cover living costs. Life insurance, funeral cover, and disability cover are also key to safeguarding livelihoods. But things don’t always go smoothly, especially when it’s time to claim or when there’s a disagreement over money owed. That’s where the NFO steps in to make a real difference.Since kicking off on March 1, 2024, the NFO has handled 40 859 cases. In that time, it says it’s managed to recover R416,02 million for consumers – an achievement that shows how serious the NFO is about protecting people’s rights and ensuring fair play in the financial services game.
“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 Steyn. She adds that the financial services and insurance sectors are vital to the country’s well-being.The NFO’s contact centre has been dealing with 125 741 emails, 25 162 WhatsApp calls and messages, and 127 019 phone calls in its first year.
The NFO says by offering free dispute resolution, it’s empowering consumers and keeping financial institutions accountable too.But Steyn warns that the risks are growing, especially in banking and credit, as technology gets smarter and more widespread.
“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,” says Steyn.
“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 fairly and equitably,” says Steyn.
Looking ahead, the NFO says its core mission is to settle disputes in the financial services and insurance industries, but Steyn reckons it’s got an even bigger role to play moving forward.
“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 impacted the most when they face a financial loss. This is where the NFO makes the biggest difference. Additionally, the NFO will continue to champion the cause of consumer financial education and awareness of their rights and obligations to ensure better outcomes as they face this complex environment,” says Steyn.
Looking back on the past year, Steyn says the solid foundation is there, but the hard work’s far from over. She says the NFO is determined to keep shaping South Africa’s financial services landscape for the better.