Do you need an ombudsman or an industry regulator?

If you feel as though your creditor or insurance company is taking advantage of you, you may be wondering where you can get help and whether there are organisations to protect you.

The simple answer is yes. Both ombudsmen and regulators are there to ensure financial institutions act fairly. But what’s the difference between these two, and when should you reach out to them?

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The difference between an ombudsman and a regulator

According to Reagan Mitchell, certified financial planner and managing director of WealthyMe, both ombudsmen and regulators assist consumers, but in slightly different capacities.

The ombudsman is an impartial institution that reviews customer complaints against financial services providers and makes determinations based on the evidence at hand.

“Previously, when there were no industry ombudsmen, aggrieved customers had to go to court to get determinations. Unfortunately, the average South African consumer couldn’t afford to pay lawyers to assist with the process,” says Mitchell.

Regulators, on the other hand, create the regulation that governs the conduct of participants in a specific industry.

“Organisations that want to enter an industry would need to get approval from the regulator. Their main aim remains to protect consumers,” says Mitchell.

Therefore, if you have a complaint about the service you have received, you should reach out to an ombudsman. On the other hand, if you need to report a financial institution for breaking regulations, you should reach out to a regulator.

READ MORE: Why are there different credit bureaus in South Africa?

When should you get help?

Mitchell points out that most financial services companies have a complaints resolution process prescribed by specific acts of law.

“When a customer is dissatisfied with a service or financial outcome as a result of advice received, their first recourse is to lodge the complaint directly with the company in question,” says Mitchell.

“There is a prescribed period in which the company needs to respond to the complaint, failing which, the customer can escalate the claim to the ombudsman,” he explains. 

Mitchell adds that if the client is dissatisfied with the response from the company, the client also has the right to escalate the complaint to the ombudsman.

Who should you reach out to?

If you find yourself in a situation where you need to escalate a matter, you can reach out to the overseeing body, depending on the product in question.

For example, if you have trouble with a credit product, you can reach out to the National Credit Regulator, and if you have issues with car insurance you need to get help from the Ombudsman for Short Term Insurance.

Here’s a list of the most common financial products and their respective overseeing bodies:

• Credit, loans, and debt: Credit Ombud and National Credit Regulator
• Car insurance: Ombudsman for Short Term Insurance
• Banking: Ombudsman for Banking Services

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