Ombud gets R328 million back for disgruntled financial consumers

The National Financial Ombud Scheme managed to claw back a staggering R328.5 million for disgruntled financial consumers in the first year of its existence after all four former financial ombud schemes were combined into a single, one-stop dispute resolution service.

According to its first annual report, the National Financial Ombud Scheme South Africa (NFO) handled an impressive 35 855 complaints through its four divisions, non-life (short-term) and life insurance, banking and credit between 1 March 2024 and 31 December 2024.

Reana Steyn, head ombud and CEO of the NFO, says the sheer number of complaints received and the large sums of money recovered are testament to the NFO’s effectiveness and commitment to fairness in dispute resolution and the power of independent mediation.

“This recovery of monies helped individuals and families regain lost financial stability, reinforcing the NFO’s role as guardian of justice in financial services. The NFO has continued to solidify its role as a pillar in the South African landscape that ensures access for financial consumers to transparent and effective resolution of disputes,” the report said.

The total amount of R328 550 212.58 that the NFO recovered on behalf of consumers is made up of R29 175 451.14 recovered by the banking division, R2 355 840.20 recovered by the credit division, R202 854 491.24 recovered by the life insurance division and R94 164 430.00 recovered by the short-term insurance division.

The NFO resolves complaints on average within 115 days, while the banking division took on average only 52 days to close cases, the credit division 79 days, the life insurance division 152 days and the short-term insurance division 177 days.

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Banking division recouped R29 million for consumers

Nerosha Maseti, the lead ombud for the banking division, says in the annual report that despite major internal changes, the banking division adapted seamlessly, handling and resolving complaints at a faster rate than the previous year, while maintaining a strong commitment to fair outcomes.

The banking division opened a total of 15 412 cases and closed 11 535 successfully, recovering a total of R29 175 451.14 for consumers. Most of the banking cases opened (20%) were against Capitec that had 1 203 complaints, as can be expected as it has the most number of customers. The NFO found in favour of consumers in 22% of these cases.

FNB came in at a close second with 1 017 cases opened, representing 17% of all cases, with findings in favour of complainants totalling 16%. Standard Bank had 998 cases opened, representing 17% of all cases and 19% of findings in favour of complainants.

Nedbank had 881 cases opened, representing 15% of all cases and 22% of findings in favour of complainants, while Absa had 812 cases opened, representing 14% of all cases and 13% of findings in favour of complainants.

The top categories in the banking division were current accounts, personal loans, savings accounts, credit cards and home loans, while fraud remained the leading issue in consumer banking complaints, representing 30% of all cases.

Complaints related to maladministration were the second highest category and debt-stressed consumers the third, reflecting the ongoing financial challenges consumers have to deal with.

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Credit division recouped R2.3 million for consumers

The NFO’s credit division successfully closed 2 040 cases, achieving positive outcomes for complainants in 49% of cases and financial redress totalling about R2.4 million.

The Retail Credit Solutions (RCS) Group had the most number of cases opened, totalling 243, representing 17% of all cases opened. The division found in favour of complainants in 44% of the cases.

OPCO 365 was in second place with 133 cases opened, representing 9% of all cases, while Edcon Limited had 126 cases (9%) and DMC Debt Management had 121 cases (9%)

Howard Gabriels, lead ombud for the credit division, says two matters the division dealt with stood out for their systemic impact during the reporting period were about value-added services (VAS) and minimum payment calculations with a number of retailers.

“A serious concern emerged regarding the application of payments on credit accounts where VAS charges, such as airtime or insurance add-ons were not considered in determining the minimum monthly payments, leading to growing balances despite customers paying what they believed to be the full amount due.

“After we intervened, the affected credit provider agreed to write off inappropriate balances and amend its internal policy to ensure VAS charges are included in future minimum payment calculations.”

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Non-life division recouped R94 million for consumers

The NFO’s non-life insurance division closed 9 289 cases and recovered R94 164 430.00 on behalf of consumers. Edite Teixeira-Mckinon, lead ombud for the non-life insurance division, says complaints related to motor vehicle insurance accounted for 42% of all the complaints finalised/resolved.

This was followed by homeowners’ insurance complaints at 27%, commercial complaints at 14%, household contents complaints at 6% and other types of insurance and nonclaim-related complaints, combined at 11%.

“The highest number of complaints about motor vehicle insurance were about claims for accidents, at 62%, followed by warranty and mechanical breakdown claims at 18% and theft and hijack claims at 9%.

“The primary reason for complaints under this category of insurance was claims rejected on an exclusion in the policy. The leading exclusion was failure to prevent or minimise loss or damage, also known as a lack of due care, or recklessness.”

Under homeowners’ insurance, the most number of complaints were about claims for loss or damage due to acts of nature at 40%, followed by bursting of water apparatus at 16% and theft and burglary at 8%.

The primary cause for complaints was rejected claims based on gradual deterioration, lack of maintenance, or wear and tear, while disputes about the amount claimed were also a key issue.

In this division, Santam Limited had the highest number of formal complaints at 684, followed by Standard Insurance Limited at 632, Old Mutual Insure Limited at 613, Absa Insurance Company Limited at 560 and Discovery Insure at 501.

Life insurance division recouped R202 million for consumers

The NFO’s life division finalised 5 977 cases in 2024 and recovered a total amount of R202 854 491.24 for consumers.

Denise Gabriels, lead ombud for the life division, says funeral benefits remained the product most consumers complained about, accounting for 45% of complaints. Declined claims were the most common cause for complaints at 56%, followed by complaints about poor service or administration at 34%.

In the life division the most complaints were about Old Mutual at 628 formal cases, representing 18% of all complaints, followed by Liberty with 399 formal cases representing 11%, Hollard Life Insurance with 259 cases representing 7%, Metropolitan Life with 216 cases representing 6% and Sanlam Life Insurance with 188 cases representing 5%.

Haroon Laher, chair of the NFO board, says the establishment of the NFO was an act of bravery.

“Bravery in anything we do does not merely mean facing the loudest, or sometimes the most powerful, voices. It requires those involved to listen to the quietest whispers of those who have been wronged.

“It takes courage to confront an issue. It is this very courage, carried out through acts of bravery, that will define the NFO in what it does and achieves.”

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