Attached herewith please find our representations on the above mentioned Bill.

Thanking you for your assistance herein.

Yours faithfully

The revised version of the Bill is a considerable improvement upon earlier versions We are grateful to have had the opportunity to comment on the earlier versions of the bill and pleased that most of the concerns raised by us have been satisfactorily dealt with.

Two issues may, however still require further consideration in order to ensure that the Bill is both workable and consumer friendly

13. (2) No ombud of a recognised scheme has jurisdiction t0 resolve a complaint or settle a matter in respect of which the Adjudicator or statutory ombud has in terms of a law jurisdiction, except in the case of any such complaint in respect of which the Adjudicator or statutory ombud has in terms of a law declined to resolve the complaint or settle the matter.

The granting of sole jurisdiction to the FAIS ombud in respect of complaints relating to financial advice flies in the face of the internationally accepted consumer right of choice, or the right to select from a range of products or suppliers. The subsection is, in effect monopolistic.

It is respectfully submitted that no adequate motivation has been advanced by the drafters of the Bill to justify this drastic step.

At present a number of avenues are open to investors who have a complaint relating to advice that they received. These included the voluntary ombudsman schemes (such as ourselves), the courts, private arbitrators and mediators and the media Nothing in the Bill will change the fact that the courts are the primary and indeed superior, source of guidance and precedent in respect of legal issues pertaining to the rendering of investment advice.

The Ombudsman for Banking services has, of necessity, built up considerable experience and expertise in dealing with investment related complains over the last four years. Furthermore, its levels of efficiency in terms of turnaround times for the completion of complaints is the envy of other similar schemes internationally.

We work closely with various government departments, including the Department of Trade and Industry and the Ministry of Housing. The former acknowledged our contribution by conferring upon us its Consumer Champion Award for industry-based initiatives in 2004.

The fact that this organization is able to deal with matters that other organisations are also able to deal with has never presented a problem in practice, as referral arrangements have been made with numerous other organisations, including the other voluntary ombudsmen, provincial consumer affairs departments, legal aid clinics the Legal Aid Board and commercial enterprises that offer legal assistance to clients Last year, only 20 percent of the matters dealt with by the office were referred to us by the banks A greater number of people were referred to us by other organisations or came to hear of us through word of mouth referrals.

In practice, it is sometimes difficult to establish the precise nature of a complaint and therefore to categorize it for the purposes of determining jurisdiction. It sometimes happens that a complaint is resolve 10 the satisfaction of the complainant, through the process of mediation, without it ever having been decided what the precise cause of the complaint was. With mediated matters, unlike rights-based decisions the actual underlying cause may not be the real issue as the solution is interest based, rather than positional. While awaiting the implementation of the FAIS Act, this Office has made extensive use of mediation.

In some instances, the complainant initially couches the complaint in one form, while our final decision is on a different basis altogether. For instance, a complaint relating to performance of an investment may be determined on the basis rather of the appropriateness of advice given or even some maladministration unrelated to the advice given by the bank.

A further complication is that, not infrequently investment related matters are interlinked with other issues such as an overdraft facilities and security. Sometimes numerous factors contributed to the complainant's loss.

In early drafts of the FAIS Act, emphasis was placed on formalistic hearings and rulings. Now the emphasis is on conciliation (possibly due to the problems experienced by the Pensions and Banking Adjudicators).

This means that the previous justification for the FAIS ombud to deal with all investment related matters in order to ensure uniformity of precedent and principle falls away: the emphasis is on "out of the box solutions" in mediation.

It is submitted that the Act ought to permit the concurrent jurisdiction of the non- statutory ombuds to continue, through the deletion of Section 13(20. If the Bill is approved In it present form, various practical difficulties will arise.

It is to be expected that the FAIS ombud will take time to build capacity to deal with complaints speedily. It is likely that his resources will be stretched by an influx of complaints against brokers and intermediaries, against whom there was no redress previously. This office has current capacity to deal with investment related complaints speedily. To cater for this situation, it is suggested that this office be permitted to continue dealing with such matters (that fall within the FAIS ombud's jurisdiction) until such time as the FAIS ombud has gained the necessary capacity. In light of this, it is suggested that the implementation of Section 13(2) be delayed for, say, two years, i.e. the commencement date should be promulgated later, to ensure as smooth as possible a takeover by the FAIS Ombud of the advice related complaints.

As the FAIS ombud's jurisdiction commenced running on 30 September 2004, the existing ombudsmen will continue to deal with matters arising before then, even if received after that date. Accordingly, care will need to be taken in ensuring that this class of complainants does not refer complaints to the FAIS ombud.

Jurisdiction (uncertainty)

Section 13 (3) is in line with the present practice adopted by the various existing ombud schemes. It is suggested, however, that Section 13 (4) be amended by the inclusion, at the end of the subsection, of the words: "The council may review the statutory ombud's said determination upon the request of an ombud affected by it, having regard to the public interest, prejudice to the interests of clients and the objects of this Act (the factors mention in subsection 18 (4) (a) (ii).

Such an amendment would be in line with Section 8-(2) (b), which assigns the co-ordination of the activities of the various schemes to the council. Furthermore, it would avoid placing the statutory ombud in the uncomfortable position of a quasi- legislator and judge in his own cause.

It would also be consistent with the principle embodied in section 28 (4) of the Financial Advisory and Intermediary Services Act. 2002 that the FAIS ombud's decisions are subject to appeal.

Based on the experience of the relationship between the existing schemes. It is not anticipated that the proposed "appeal" process would be resorted to lightly or in anything but exceptional circumstances.

On an incidental matter, this Office prides itself in processing and referring matters to the banks for action within two days and finalizing them as rapidly thereafter as possible. We are concerned that our service levels might be negatively impacted upon by tardy referrals being received from the FAIS ombud. Our concern arises from our experience in dealing with other organization. This is perhaps an issue that can be dealt with in subordinate legislation.