Assessment: Duties and Powers of the FAIS Ombud

Please complete the sentence. Mary a, a client of XYZ Brokers and authorised FSP, has referred a complaint to the FAIS Ombud for possible resolution. In terms of the FAIS Act, the FAIS ombud may charge a case fee to-

The FAIS Ombud plays an important role in resolving disputes regarding the rendering of financial services. Which one of the following statements is correct?

When can the respondent appeal against the determination of the ombud?

The Ombud has the power to determine whether or not a complaint falls within the ambit (domain) of the FAIS Act and the Ombud Rules and must reject a complaint which falls outside such ambit. Which of the following is correct?

What is the maximum monetary award that the FAIS ombud can award a client if not exceptions regarding the limit of losses are applicable?

Mega Brokers logged the following complaints during their 2012 financial year. Indicate which of these complaints are considered to be valid FAIS complaints:

i) Mr B wrote A letter complaining that the representative that marketed a funeral plan to him was very rude.
ii) Ms C complained that the representative completed the policy application form, after she signed the bank application, without consulting her about the product options.
iii) Mrs D wrote A letter to complain that the representative that assisted her with her short-term insurance advised her on the type of car she must drive, and she does not agree with this advise
iv) Mr E took out a product for his grandson and at claim stage was advised that the claim would not be paid as his grandson could not be covered as per the product rules. He submitted a complaint as the representative did not inform him of this.

A final determination by the Ombud for FSP’s in respect of the complaint may include which of the following?

i) Any order which could be made by a court.
ii) The dismissal of the complaint wholly or partially.
iii) The FSP is directed to take certain steps in relation to the complaint.
iv) The complaint is upheld and compensation awarded to the FSP.

Mr Davis, a client of James Stuart of Apex Advisors lodges a written complaint against the representative and FSP. Which of these actions are sufficient ground for a complaint as defined in the FAIS Act and will be eligible for referral to the FAIS Ombud should Mr Davis not be satisfied by the resolution offered by Apex Advisors?

i) James Stuart did not obtain information from Mr Davis about his current financial situation before recommending products to the client. As a result, Mr Davis noticed 5 years later, after another broker advised him, that he took out product that is very similar to a product he already had and therefore paid unnecessary premiums on a product he did not need.
ii) Mr Davis took out a product in 1998 that provides cover in the event of his death. He realised shortly thereafter that the advice rendered by James Stuart at the time the product was taken out, was incorrect since the cover is not sufficient in light of his (then) financial circumstances.
iii) Mr Davis realised 2 years ago that one of the products he took out in February 2010 was not the best product James could recommend. It came to light that the advice was biased since James recommended the product Mr Davis took out as result of higher commission payable.
iv) Mr Davis took out a unit trust in 2007. James made full disclosures about the underlining portfolio and also made it clear to Mr Davis that the past performance on the product is not indicative of future performance. Mr Davis realised that the product’s performance was far below what he expected, due to changes in the market, and as result suffered a huge financial loss.

The FAIS Ombud has accepted a complaint. However, the complainant did not provide the Ombud within a reasonable time requested documentation. In terms of the FAIS Act, what must happen in this regard?

The respondent in a matter has applied for leave to appeal a determination made by the FAIS Ombud. The FAIS Ombud has refused this request. Which of the following statement are correct in this regard?

i. The Ombud must inform the respondent only in writing and give reasons for the refusal.
ii. The Ombud must inform the respondent and the complainant in writing and give reasons for the refusal.
iii. The respondent can apply to the chairperson of the Financial Services Tribunal for leave to appeal.
iv. The respondent can apply to the Financial Sector Conduct Authority for leave to appeal.