New Rules for Fais Ombud: Compensation Limit Increased to R3.5 Million

The maximum compensation limit awarded by the Ombud for Financial Services (Fais Ombud) has been increased from R800,000 to R3.5 million, according to new rules published by the Ombud Council. This significant change, welcomed by Fais Ombud Advocate John Simpson, aims to provide greater assistance to consumers and investors who have suffered financial prejudice or damage.

The increase in the jurisdictional limit is seen as a positive step, as it allows the Fais Ombud to handle complaints involving larger sums of money, especially in cases of retirement advice and financial planning. Simpson highlighted that the previous limit of R800,000 often forced complainants to forgo the excess amount before the investigation could proceed.

With the new rules coming into effect, there is an anticipation of an increase in complaints received and investigated by the Fais Ombud. However, Simpson is confident that his office will be able to meet the challenge and provide effective resolution to the complaints.

The updated compensation amount aligns the Fais Ombud with other financial sector ombud schemes, ensuring that consumers have access to fair and independent dispute resolution services. The rules also include provisions for dealing with complaints related to unauthorised financial services providers and ensuring cooperation from all parties involved.

Overall, the new rules aim to enhance the effectiveness of the ombud system, provide clearer consequences for non-cooperation, and improve the process for handling complaints. The increase in the compensation limit reflects changes in the value of money and market realities since the limit was first set two decades ago, ensuring that consumers are adequately protected and compensated for financial losses.