Page 94 - Profile's Unit Trusts & Collective Investments - September 2025

Chapter 5 Legislation and guidelines

consumer groupings, there do not seem to be any already understood terms that could readily be
used to clearly distinguish between the PSA and RFA adviser categories. Instead, it is clear that
whatever designations are finally adopted will require a wide-ranging consumer awareness and
education campaign”.
The FSCA’s latest proposals are that a PSA (including a juristic PSA) should be limited to
providing both advice and non-advice intermediary services in respect of its “home financial group’s
products only.”
The FSCA’s December 2019 update also clarified its position on attempts to more clearly delineate
intermediation activities, outsourced services and advice. The FSCA is considering several possible
legislative proposals, including:
R rules to facilitate the charging of advice fees separate from commissions in order to achieve a
clear demarcation of advice and “services as intermediary”;
R an approval process to replace the current outsourcing notification process, plus further
reporting requirements in respect of outsourcing.
These are preliminary proposals that are still to be tested on consumers.
Another RDR proposal with far-reaching consequences seeks to stop agents earning recurring
fees unless the financial adviser is providing recurring advice. Currently many financial advisers
earn commission on recurring monthly payments (such as debit orders) even if they do not see
clients regularly to review their portfolios, needs and risk profiles.
FAIS Ombud
The FAIS Act sets up the Ombud for Financial Service Providers or FAIS Ombud, charged
with adjudicating complaints. In terms of the Act, the objective of the Ombud is to “consider and
dispose of complaints in a procedurally fair, informal, economical and expeditious manner”. The
office of the Ombud provides a dispute resolution mechanism which avoids lengthy and costly court
proceedings. In considering complaints, the Ombud must consider the contractual arrangements
and legal relationship between the parties, and must act in a fair, impartial and independent manner.
A determination made by the Ombud (or a final decision by a board of appeal) is regarded as a civil
judgement of court.
The Ombud has fairly broad powers in terms of the FAIS Act. He may elect to refer a matter to
court if he feels that there are reasonable grounds why the office of the Ombud should not deal with
the matter. Most disputes between consumers and FSPs or FSPRs, however, will be considered by
the Ombud. Note that the Ombud may not consider a matter which has already been taken to court.
Before beginning an official investigation into a complaint, the Ombud must in writing inform every
other interested party about the complaint, and must give all parties an opportunity to submit a
response to the complaint.
The Ombud must, as a first resort, “explore any reasonable prospect of resolving a complaint by a
conciliated settlement acceptable to all parties”. The Ombud may suggest mediation to the parties,
and may allow legal representation if he feels this is appropriate.
Where possible, the Ombud will suggest a solution to the parties. The parties must advise the
Ombud whether his recommendation is acceptable, and must give reasons if it is not acceptable.
Where the parties accept the Ombud’s recommendations, it has the force of a court order.
If the Ombud is unable to achieve some conciliation between the parties, the Ombud
must make a final determination. This could involve dismissing the complaint, upholding the
complaint, or partially upholding the complaint. In the latter cases, the Ombud may make a
monetary award as compensation for damages suffered, provided this does not exceed the limit on
awards. This amount was set in the rules on proceedings under the FAIS Act in 2003 at R800 000.
In July 2024 this amount was increased for the first time in two decades to R3.5m when the
Ombud Council Rules for the Ombud for Financial Services (FAIS Ombud) were published in terms
of FSR Act. The Ombud may also order the FSP or representative to take specific action in relation
to a complaint.

92 Profile’s Unit Trusts & Collective Investments September 2025