Consumers who are financially vulnerable and locked in disputes with companies now have a recourse mechanism through the National Financial Ombud Scheme (NFO).

A year after its establishment, the NFO has reported that, as technology continues to advance, so too does the "threat landscape" in the banking and credit sectors.

Reana Steyn, Head Ombud for the NFO, says they’ve made a significant impact since the NFO’s formation last year.

"We have had a meaningful impact on the lives of thousands of South Africans by providing a vital safety net and recourse mechanism for those experiencing maladministration, disputes with financial service providers, or significant financial loss. Few realize how important it is to have access to this kind of assistance until they become victims of fraud or suffer a financial loss," said Steyn.

The NFO was formed following the amalgamation of the Ombudsman for Banking Services (OBS), the Credit Ombud (CO), the Ombudsman for Long-Term Insurance (OLTI), and the Ombudsman for Short-Term Insurance (OSTI).

The NFO’s formation marked a significant milestone in the financial services sector, as it now serves as a single body capable of addressing complaints and disputes fairly and equitably for both consumers and companies within its scope.

Steyn explained that the NFO's primary purpose is to settle disputes between consumers and companies, particularly in the country’s financial sector. Many consumers rely on financial services to insure their most valuable assets, purchase assets, or fund living expenses through loans or store accounts.

“Life insurance, funeral cover, and disability cover also play an extremely important role in protecting the livelihoods of many. However, interactions between parties often lead to disputes, especially at the claims stage or when disagreements arise over amounts due. This is when the NFO steps in to make a real difference,” Steyn added.

In its first year, the NFO handled 40 859 cases and refunded a total of R416.02 million to consumers. The body also received 125 741 emails and 25 162 WhatsApp calls and messages through its contact center. In total, the NFO received 127 019 telephone calls in its inaugural year.

The NFO reports that many South Africans currently face financial challenges and confusion regarding their rights and obligations. These issues are exacerbated by the financial pressures typically experienced at the beginning of the year, which often lead to over-indebtedness and complications with credit agreements.

Steyn noted that the NFO is preparing for an increase in complaints as the public faces challenges related to evolving technology, new fraudulent schemes, and irresponsible financial institutions in the years ahead.

"Scammers and fraudsters are increasingly using technology to impersonate representatives from financial institutions, convincing consumers to take actions that may harm them," Steyn explained.

“We urge the public to stay informed about their rights and obligations regarding their financial contracts. If they believe they have fallen into a vulnerable category, they should alert the NFO. It’s also important to remember that the NFO handles all complaints in a fair and equitable manner,” she added.

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Financial recourse for consumers