The National Financial Ombud Scheme South Africa (NFO)

Since its establishment a year ago, the National Financial Ombud Scheme South Africa (NFO) placed a staggering R328,5 million in the hands of aggrieved consumers who had complained about financial institutions.

Between 1 March 2024 and 31 December 2024, the NFO handled an impressive 35 855 complaints that had been dealt with by its four divisions, Non-life and Life Insurance, Banking and Credit.

Reana Steyn, Head Ombud and CEO of the NFO, said the sheer number of complaints received and the large sum of money recovered are testament of the NFO’s effectiveness and commitment to fairness in dispute resolution and the power of independent mediation.

“This recovery of monies has helped individuals and families regain lost financial stability, reinforcing the institution’s role as a 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 to financial consumers to transparent, and effective resolution of disputes.”  

Of the total amount of R328 550 212,58 recovered on behalf of complainants, the Banking division of the NFO recovered R29 175 451,14; Credit R2 355 840,20; Life R202 854 491,24; and Non-life R94 164 430,00.

With an average turnaround time of 115 days for all complaints that came before the NFO, the Banking Division performed best, taking an average 52 days to close cases. The Credit Division took 79 days, Life Division 152 days and Non-life 177 days to resolve complaints.

Nerosha Maseti, the Lead Ombud for the Banking Division said in the inaugural annual report of the NFO that despite major internal changes, the Banking Division adapted seamlessly, handling and resolving complaints at a faster rate than the previous year, “all the while maintaining a strong commitment to fair outcomes”.

The Banking Division opened a total of 15 412 cases, of which 11 535 cases were successfully closed. A total of R29 175 451,14 was recovered for consumers.

Of the five banks with the highest number of cases opened, Capitec led with 1203. This represented 20% of all cases opened, as can be expected for the Bank with highest number of customers by far. Findings in favour of complainants totalled 22%. FNB came in at a close second with 1017 cases opened, representing 17% of all cases opened, 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. ABSA had 812 cases opened, representing 14% of all cases and 13% of findings in favour of complainants.  

The categories of complaints that kept the Banking Division most busy were current accounts, personal loans, savings accounts, credit cards, and home loans, in that order. Fraud remained the leading issue in consumer banking complaints, representing 30% of all cases. Complaints related to maladministration and debt-stressed consumers followed as the second and third highest categories, reflecting ongoing financial challenges faced by consumers.

The Credit Division of the NFO successfully closed 2 040 cases, achieving positive outcomes for complainants in 49% of cases. This resulted in financial redress totalling approximately R2.4 million.  

The Retail Credit Solutions (RCS) Group had the highest number of cases opened, totalling 243. This represented 17% of all cases opened. Findings in favour of complainants totalled 44%. OPCO 365  had 133 cases opened, representing 9% of all cases opened; Edcon Limited had 126 cases opened, representing 9% of all cases opened; and DMC Debt Management had 121 cases opened, representing 9% of all cases opened.

Howard Gabriels, Lead Ombud: Credit Division, said two matters that stood out for their systemic impact during the reporting period were 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.  

“This led to growing balances despite customers paying what they believed to be the full amount due. Following our intervention, 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,” said Gabriels.

During the reporting period, the Non-life Insurance Division of the NFO closed 9289 cases. A total of R94 164 430.00 was recovered on behalf of complainants.

Edite Teixeira-Mckinon, Lead Ombud: Non-life Insurance Division, said complaints related to motor vehicle insurance accounted for 42% of all the complaints finalised/resolved during the year.  

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%.

“As regards motor vehicle insurance disputes, the highest number of complaints considered related to 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 motor category of insurance was claims rejected on an exclusion in the policy, the leading exclusion being the failure to prevent or minimise loss or damage, also known as a lack of due care, or recklessness.” she said.

Under homeowners’ insurance, the highest number of complaints finalised during the year related to claims for loss or damage due to acts of nature, at 40%. This was followed by the bursting of water apparatus, at 16%, and theft and burglary, at 8%.

The primary cause for complaints under this category was the rejection of claims based on gradual deterioration, lack of maintenance, or wear and tear. Another key cause for disputes related to the quantum of the claim.

Santam Limited had the highest number of formal complaints opened 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.

The Life Division of the NFO finalised 5 977 cases in 2024. A total amount recovered for complainants was R202 854 491,24.

Denise Gabriels, Lead Ombud: Life Division, said funeral benefits remained the product most complained about, accounting for 45% of complaints. Claims being declined were the most common cause for complaint at 56%, followed by complaints about poor service or administration at 34%.

Of the five life insurance companies that received the most complaints, 628 formal cases were opened against Old Mutual Life Assurance Company SA Ltd, representing 18% of all complaints opened. Liberty Group Limited had 399 formal cases opened representing 11%, Hollard Life Insurance Company had 259 cases representing 7%, Metropolitan Life had 216 cases representing 6%, and Sanlam Life Insurance Ltd had 188 cases opened representing 5%.

Haroon Laher, chairperson of the NPO Board, said 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,” Laher said.