Funeral policies accounted for the bulk of complaints dealt with by the Financial Advisory and Intermediary Services (FAIS) Ombud in the 2023/2024 financial year.
Matters regarding funeral policies accounted for the bulk of complaints dealt with by the Financial Advisory and Intermediary Services (FAIS) Ombud in the 2023/2024 financial year.
According to its annual report, the second highest category of complaints related to short term insurance for houses and vehicles. This was followed by complaints related to investments, retirement and foreign exchange matters.
The report noted that there were also complaints about cryptocurrency, which related mainly to allegations of fraud.
“Consumers made payments based on cryptocurrency investment advertisements on social media and received nothing in return. The office was unable to assist unless a registered financial services provider is involved in the transaction,” the report said.
Of the 10 574 complaints received, 4 501 were dealt with by the Ombud with some of the remainder referred to other Ombuds schemes. The bulk of the complaints dealt with were due to non-payment of claims followed by fraudulent or unauthorised policies.
An amount of R39 million was paid out in settlements.
Advocate John Simpson from FAIS said that the office had introduced numerous workflow and case management processes to tackle the historical challenge of addressing complaints.
“The office subsequently identified hundreds of active cases on our system that were up to ten years old and had never been successfully resolved.
All these matters were subsequently resolved and closed.”
The total number of justiciable complaints resolved, which included those carried over from previous financial years, was 5 046.
“The number of complaints settled during 2023/24 was 1 772. As a result of this, the Office of the FAIS Ombud was able to produce a settlement ratio of 35% compared to the 29.24% achieved during the 2022/23 financial year. The overall settlement value for the 2023/24 financial year was R39 525 923, an increase from R39 133 121 in 2022/23.”
One of the complaints dealt with an insurance company failing to settle a claim from a woman for a stolen Land Cruiser because the vehicle had not been fitted with a tracking device.
“The vehicle was stolen from her place of employment on July 30, 2018.
The complainant submitted a claim with the insurer for R312 400.00, which was rejected because the complainant’s stolen vehicle did not have a satellite early warning device. The complainant submitted that she was unaware of the requirement.”
The report noted that the insurer had failed to alert the complainant of the requirement and failed to provide proof of a telephonic conversation instructing the client to install the device.
“A determination was issued, ordering the insurer to pay the complainant the amount of R301 466 and interest on the said amount at a rate of 11.75% per annum.”
The report added that in another case, a complainant took out a funeral policy for a benefit amount of R40 000.
“The complainant’s cousin passed away on April 13, 2020, and a claim was subsequently submitted on 15 April 2020. All the required proof of the claim were submitted. The insurer rejected the claim, saying that the deceased died within the policy waiting period of six months.”
The report said based on the evidence presented, the contractual six month waiting period would have started on September 25, 2019 and would have ended in March 2020, prior to the date of death.
“A determination was issued ordering the respondent to pay the complainant the amount of R40,000 and interest on the said amount at a rate of 11.75% per annum.”
Professor Irrshad Kaseeram from the University of Zululand’s Economics Department said that the increase of the resolution ratio to 35% was commendable.
“The United Kingdom has a 37% resolution rate while the US’s overall response rate is 81% and (in the US) respondents to complainants have a limited time to respond by law. Hence the resolution rates are much higher than in SA and the UK.”
The Mercury