Pillai Slams Appealing Insurance Groups

Insurance groups should not be able to appeal against FIAS Ombud They should be able to take them on review.

In the annual report released by the acting ombud of the Financial Advisory and Intermediary Services (FAIS), Charles Pillai said that insurance groups should not be given the right to appeal against his determinations.

Instead, he said, they should only be allowed to take them on review.

One of the biggest problems in the financial services industry - one that is detrimental to the consumer - is the fact that big companies appeal determinations.

The average consumer does not have the revenue to pay for litigation fees that big companies can afford and in most cases than not, the ombud's power to settle complaints in an "economical, expeditious and procedurally fair manner" are thwarted.

Pillai argued in his report that the ombud's determination should be the final word in a case.

Pillai believes that the policy as it exists today is open to abuse. To avoid the exploitation of the system and to allow consumers a fair chance against big insurance companies, there should be no appeal against ombud rulings, Pillai said.

"The time has come for this industry to accept the nation of no appeal for the respondent and only a right of review," wrote Pillai in his annual report. "This system has worked well in several European countries, and I see no reason why it cannot be successfully applied in South Africa."

According to the report, the number of complaints that reached the ombud's office climbed by 30% to incorporate a total number of 7416 people.

50% of the complaints related to investments, retirement and medical schemes, 27% related to long term insurance, while 23% related to short term insurance.

In the previous year, R14 million was awarded to consumers, while in the year leading up to March 2009, this number climbed 132% to nearly R33 million.