The Office of the Pension Funds Adjudicator (OPFA) is inter alia subject to the functions of both the Financial Services Tribunal (FST) and the Ombud Council. These bodies have been established with the adoption of the twin peaks model of regulation in South Africa and in terms of the Financial Sector Regulation Act, 2017 (FSR Act). The FST is clothed with powers to consider reconsideration applications in respect of decisions taken by the Adjudicator in relation to complaints lodged with the Adjudicator for determination, whilst the Ombud Council acts as a regulator of ombud schemes, including the OPFA.
The Financial Services Tribunal
The FST is the successor of the old FSB Appeal Board which dealt with decisions made by the then Financial Services Board. The FSB Appeal Board did not have jurisdiction over Adjudicator decisions. Adjudicator decisions, at the time, were subject to applications in terms of section 30P of the Pension Funds Act, 1956 (PF Act).
Section 30P, which still exists, allows a person aggrieved by a determination of the Adjudicator to apply to the High Court for relief, within six weeks of the determination. As High Court litigation is normally associated with high costs that would ordinarily be unaffordable for a pension fund member, this placed them at a severe disadvantage facing opponents with typically deeper pockets.
Giving effect to section 34 of the Constitution of the Republic of South Africa, 1996 which promises that everyone has the right to have any dispute that can be resolved by the application of law decided in a fair public hearing before a court or, where appropriate, another independent and impartial tribunal, the FSR Act established the FST in Chapter 15. It brought within the ambit of the FST a decision taken by a statutory ombud, such as the OPFA, in relation to a specific complaint by a person and included statutory ombuds in the definition of “decision-maker”.
This means that a person aggrieved by a determination of the Adjudicator is no longer limited to recourse in the High Court but may apply to the FST for a reconsideration. The process is free, relatively simple and highly efficient. The term “person aggrieved” required some clarification because it is not just anybody who can apply for a reconsideration, the person aggrieved must be “…someone against whom a decision has been pronounced which wrongfully deprived that person of something, or wrongfully affected his/her title to something…” (South African Local Authorities Pension Fund v Registrar of Pension Funds [2017] 1 BPLR (FSAB)).
It has been held by the FST, in certain instances, that a pension fund does not qualify as a person aggrieved relating to death benefit disputes (see Momentum Retirement Annuity v LH Botha and Others, PFA47/2021) and withholding of benefits pursuant to section 37D of the PF Act (see Fundsatwork Umbrella Pension Fund v EE Ngobeni and Another, PFA64/2020). It should be noted that this does not mean that in every instance of a death benefit dispute or withholding of a benefit, the pension fund is not an aggrieved person. If, for example, a pension fund has already paid out the benefit it could still be considered as a person aggrieved (see Momentum Retirement Annuity and Another v K Haitas and Another, PFA22/2023).
Panels of the FST consist of retired judges or persons who have the relevant experience in or expert knowledge of law or financial products, financial services, financial instruments, market infrastructures or the financial system. Reconsideration applications are governed by the FST rules and are required, by the FSR Act, to be conducted with as little formality and technicality, and as expeditiously as the requirements of financial sector laws and a proper consideration of the matter permits.
A reconsideration application constitutes an internal remedy as contemplated in section 7(2) of the Promotion of Administrative Justice Act, 2000 (PAJA) and must therefore first be exhausted, unless exceptional circumstances exist, before a court can be approached to review a decision of the Adjudicator. It should be noted that this does not remove a person’s right to directly approach a court in terms of section 30P of the PF Act for other relief. The two types of recourses exist side by side.
The FST is limited in the types of orders that it may make in respect of OPFA reconsideration applications. If an applicant is successful at the FST, the FST may set aside the decision and remit it for reconsideration to the Adjudicator. It may not, on the current wording of the FSR Act, substitute the decision of the Adjudicator with that of its own (see Vivian Cohen v The Pension Funds Adjudicator and Others, PFA1/2018). A person dissatisfied by a decision of the FST may apply to court for a judicial review of the FST order in terms of PAJA or any applicable law.
The Ombud Council
The Ombud Council is established in terms of Chapter 14 of the FSR Act with the objective of ensuring that financial customers have access and are able to use affordable, effective, independent and fair alternative dispute resolution processes for complaints about financial institutions in relation to financial products, financial services and services provided by market infrastructures. It consists of the Chief Ombud (Ms Leanne Jackson), the FSCA Commissioner (Mr Unathi Kamlana) and at least four but not more than six other members. The functions of the Ombud Council include:
- recognising industry ombud schemes (such as the recently established National Financial Ombud);
- promoting cooperation between, and coordination of the activities of ombuds, including the OPFA;
- striving to protect the independence and impartiality of ombuds;
- promoting public awareness of ombuds and ombud schemes and the services they provide;
- taking steps to facilitate access by financial customers to appropriate ombuds;
- publicising ombud schemes, including publicising the kinds of complaints that different ombud schemes deal with;
- resolving overlaps of the jurisdictional coverage of different ombud schemes;
- monitoring the performance of ombud schemes, including the extent to which they comply with the requirements of financial sector laws; and
- supporting financial inclusion.
The Ombud Council may make rules for, or in respect of, ombud schemes aimed at ensuring that its objectives are met. It may also issue directives to an ombud or an ombud scheme if the person has contravened or is likely to have contravened a financial sector law in so far as it relates to ombud schemes. As part of its regulatory functions, it may also:
- accept enforceable undertakings from an ombud scheme;
- commence proceedings in the High Court against an ombud scheme for an order to ensure compliance with a financial sector law in so far as it relates to ombud schemes;
- make a debarment order prohibiting a person, for a specified period, from performing a specified role in relation to an ombud scheme;
- issue administrative penalties on an ombud scheme, a member of the governing body of an ombud scheme, or an ombud;
- require information from an ombud or ombud scheme to assess compliance by an ombud or ombud scheme with a financial sector law in so far as it relates to ombuds, an Ombud Council rule, an Ombud Council directive, or an enforceable undertaking; and
- conduct supervisory on-site inspections and investigations of an ombud or ombud scheme.
Ombud schemes are required to report, on an annual basis, to the Ombud Council regarding its compliance with the financial sector laws in so far as they relate to ombud schemes, the complaints that the ombud scheme is dealing with and how they are being dealt with, and the conduct of financial institutions that is giving rise to complaints. Ombud schemes must also comply with any request by the Ombud Council, at any time, for information about the operation of the ombud scheme, trends in and implications of the conduct of financial institutions observed by the ombud scheme and any other relevant information.
It is also the responsibility of the Ombud Council to establish centres, including call centres, that facilitate financial customers’ access to appropriate ombuds. Further, if there is no recognised industry ombud scheme or statutory ombud scheme that makes provision for the resolution of complaints about financial products or financial services of a particular kind, the Ombud Council may, after consulting relevant ombud schemes, designate an ombud scheme, or two or more ombud schemes, to deal with and resolve complaints about products or services of that kind.
It is important to understand the difference between the FST and the Ombud Council. The FST deals with the outcomes of specific complaints and whether the decisions made by the Adjudicator in relations to complaints lodged with the Adjudicator should be set aside and remitted for reconsideration. The Ombud Council or Chief Ombud is not a ‘super-ombud’ that rules on the outcomes of decisions made by the Adjudicator but instead it is concerned with ensuring that ombuds are properly governed in accordance with relevant financial sector laws and promoting access by financial customers to a fair alternative dispute resolution process. Decisions of the Ombud Council are also subject to reconsideration by the FST.
Both structures have been established with the purpose of providing a safe environment in which financial customers can transact and have their disputes resolved with relative ease. They promote trust in the financial sector upon which confidence in the system thrives and which adds value to financial products. As both the FST and the Ombud Council are relatively new, we are likely to see more developments as time passes by.