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The FSB Appeal Board

Published

2017

Fri

19

May

 

Twenty-four determinations were issued by the FAIS Ombud in the 2015/2016 financial year, half of which concerned short-term insurance products. Settlements, where respondents “pleaded guilty” amounted to a staggering 1 150.

So far, the 2016/2017 statistics reveal 65 determinations of which 37, or 57%, concerned property syndications. We do not yet know how many settlements there were. The increase in determinations is mainly the result of an earlier embargo on such cases whilst awaiting the outcome of the Siegrist/Bekker appeal by the directors of Sharemax.

Judging by the number of settlements, it appears that many FSPs would rather grab these “lifelines” than run the risk of running foul of the law. This is possibly exacerbated by concerns of possible future discrimination, should they succeed.

It is often forgotten that there is an appeal mechanism available to those who feel hard done by in a determination.

The FSB’s Appeal Board is an independent tribunal comprising members who are neither employees of the FSB nor active participants in the financial services industry.

The Board consists of as many members as the Minister of Finance considers necessary. The Chairperson of the Appeal Board must be a retired judge, an advocate or attorney with at least 10 years’ experience. Other members must include persons with wide experience and expert knowledge of the financial services industry.

Who may appeal to the Appeal Board?

  • Any person aggrieved by a decision of the Executive Officer of the FSB. The Executive Officer of the FSB is also the collective of the different Registrars established by various statutory enactments contained in legislation dealing with the regulation and supervision of financial institutions (other than banks).
  • Any person aggrieved by a determination of FAIS Ombud , including a determination by the FAIS Ombud in the capacity as the Statutory Ombud referred to in the Financial Services Ombud Schemes Act, No 37 of 2004.
  • Any person aggrieved by a decision of an exchange, central securities depository and claims officer as contemplated by the Securities Services Act, No 36 of 2004.
  • Any other person aggrieved by a decision made under a law which provides for an appeal against that decision to the Appeal Board.

The Appeal Board does not have the unfettered powers of an Appeal Court as set out in the Constitution. “…the appeal board may only (a) confirm, set aside or vary the decision under appeal, and order that any such decision of the appeal board be given effect to; or (b) remit the matter for reconsideration by the decision-maker concerned in accordance with such directions, if any, as the appeal board may determine.”

From past decisions it is evident that the Board operates in a very strict legal sense, which provides a lot of comfort for those involved in cases where hearings are conducted in a less formal manner, e.g. the FAIS Ombud’s office.

FAIS Ombud Complaints

The following are extracts from the Board’s views on the powers and functions of the Ombud as expressed in the In the Siegrist/Bekker Appeal case:

“In terms of sec 20(3) of the FAIS Act, the objective of the FAIS Ombud is to consider and dispose of complaints in a procedurally fair, informal, economical and expeditious manner and by reference to what is equitable in all the circumstances, with due regard to the contractual arrangement or other legal relationship between the complainant and any other party to the complaint, and the provisions of the Act. In other words, the function is to settle complaints and not to ‘police’ financial service providers; that is the function of the Registrar (my highlighting).

“Applications for leave to appeal may be irritating to the decision-maker who believes in the correctness of her or his judgment but they should nevertheless be dealt with dispassionately.”

“…the office of the Ombud is part of an overall scheme in which disputes about financial advisers that could otherwise only have been resolved through the court system are dealt with informally, cheaply and expeditiously. Disputes do not, accordingly, lose their legal character by being referred to the Ombud as ‘complaints’.”

“The Ombud, importantly, performs the same function which a court of law would perform had such court been seized of the matter; and the Ombud does not possess a general equitable jurisdiction meaning that the Ombud cannot give a complainant more than that person’s legal entitlement.”

“It is therefore somewhat disturbing to note that the Ombud expressed the view that common-law principles have no place in proceedings before her.”

“The Ombud can only ‘make the order which any court of law may make’ provided it is in respect of a matter within her competence…”

From the above it is clear that approaching the Appeal Board for a remedial review will lead to a more formal legal process.

It is imperative, though, that you seek legal advice and follow the laid down procedures. We will elaborate on these in the next newsletter.

 
Source: Paul Kruger: Moonstone Compliance (Pty) Ltd
 
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