Public comment sought on alternative dispute resolution policy
National Treasury is seeking public comment on a policy document aimed at improving the alternative dispute resolution environment in South Africa.
Titled ‘A Known and Trusted Ombud System for All’, the document can be accessed on http://www.treasury.gov.za/public%20comments/default.aspx for public comment. Comments on the document are invited until 30 November 2017 and can be sent to firstname.lastname@example.org.
The document forms part of the comprehensive financial sector regulatory reform programme as South Africa shifts toward a Twin Peaks model of regulation. The Twin Peaks model will see the creation of a prudential regulator – the Prudential Authority – housed in the South African Reserve Bank (SARB), while the Financial Services Board (FSB) will be transformed into a dedicated market conduct regulator – the Financial Sector Conduct Authority.
The implementation of the Twin Peaks model in South Africa has two fundamental objectives, namely to strengthen South Africa’s approach to consumer protection and market conduct in financial services, and to create a more resilient and stable financial system.
Treasury on Wednesday said the ‘Treating Customers Fairly’ outcomes underpin South Africa’s market conduct framework under Twin Peaks.
“This consultation policy document addresses measures to improve the alternative dispute resolution environment in South Africa, which is provided through the ombuds system. Effective financial sector ombud schemes are needed to drive the financial sector to serve South Africans better,” said Treasury.
Currently there are six different financial sector ombud schemes in South Africa, each providing a dispute resolution platform that is free to consumers and external to financial institutions.
There are many differences in how the ombud schemes are established and how they operate, including the fact some are established through statute, while others are established through industry initiative.
While the system has provided vital assistance in resolving the disputes of many customers, Treasury said weaknesses, inconsistences and inefficiencies have been identified in its operation, which may be hampering the achievement of good customer outcomes.
The Financial Sector Regulation Act (Act 9 of 2017) takes the first step toward addressing shortcomings in the ombud system. The act establishes an Ombud Council as a full-time statutory body, tasked with ensuring that customers are able to access effective, independent, fair and affordable dispute resolution processes.
The Ombud Council will set rules for the ombud schemes to follow and drive consistent approaches and adherence to minimum best standards.
The act also requires that all financial institutions belong to an ombud scheme if a suitable one exists.
It is anticipated that the Ombud Council will be established alongside the Prudential Authority and Financial Sector Conduct Authority in 2018, and provisions relating to the ombuds system implemented thereafter.
The document proposes options for future further reform to the ombud system, including enhancing the hybrid model of statutory and industry ombuds, building on FSR Act provisions.
Other options include moving toward a centralised model, establishing a single statutory ombud scheme and moving toward exclusively industry established ombuds with strong oversight by the Ombud Council.
Each option carries different advantages and disadvantages, and future reforms will have to be carefully considered.
“This document lays the basis for future research into and engagement on ombud system reforms by National Treasury and the Ombud Council, once it is established.”
National Treasury will host stakeholder workshops on the document and further information on this will be communicated in due course. – SAnews.gov.za