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Short-term
July 14, 2021

FPI 2020 Integrated Report

Dr G. J. Sandrock

The enthusiasm with which certain Ombudsmen and members of the media greet the idea of “naming and shaming” service providers without properly informed and balanced analysis, feeds a wholly incorrect perception that South Africans need to be unnaturally wary of their banks and insurers.  While there will always be operators that should be monitored, consumers are often grossly misled by superficial analyses that ombudsmen fail to take steps to correct.

Breathless reporting of how “badly” these sectors have performed has once again been presented without context and with over-simplified conclusions. These sectors have in fact performed remarkably well and are very much improved. That news goes unreported, perhaps because it does not fit the popular narrative. However, the Ombudsmen should know better and should write their reports accordingly.

South Africa has one of the most sophisticated banking systems in the world. Our insurance industry is known and respected globally.  Each day, these companies provide their services in millions of transactions with their customers.  Most of those transactions, although dependant on highly sophisticated and smoothly running systems, may seem quite mundane to the layman, like making electronic banking transactions online, or claiming from insurance for a bumper bashing or burglary.

The overwhelming majority of clients go through these interactions as a matter of routine and for the most part, they get the service that they paid for.  Naturally however, things can and do sometimes go wrong.  In such cases the customer is encouraged to complain to the service centre and by and large these problems are quickly resolved and life continues. Little of this is ever publicly acknowledged.

Where a case is not resolved, the customer is required by law to be directed to the banking or insurance Ombudsmen where the matter is adjudicated and resolved at no cost to the complainant.  Looking at the reports of these Ombudsmen, it is clear that in the vast majority of cases the Ombudsmen consider the bank or insurer’s decision to have been correct.  Indeed, in the case of short-term insurance for example, only 17% of complaints were settled in favour of the complainant, and then often only partly so. This is roughly half the number settled in favour of complainants a few short years ago, showing just how dramatically the industry has improved, not worsened as the ill-informed would have us believe, and some Ombudsmen seem to abet.

As less than 3% of insurance claimants complain, 17% thereof represents less that one half of one percent of all claims. As a proportion of the vast number of transactions that are efficiently dealt with each day, this shows remarkably few errors by insurers. Banks show similarly impressive results. These facts however, are not reported.  

We desperately need someone to deliver these facts in a manner that will help us understand what is really going on ‘out there’. This is not fake news but distorted misinformation, and it needs to be stopped. South Africa and its financial services industry deserves far better from its ombudsmen and their reporters.

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