Latest news with #NationalFinancialOmbudSchemeSouthAfrica
IOL News
06-08-2025
- Business
- IOL News
Miway achieves one of the industry-leading overturn ratios of 6%, in latest ombud report
Miway has recorded one of the lowest overturn ratios (also referred to as resolved ratio) across the short-term insurance industry at just 6% – according to the recently released National Financial Ombud Scheme South Africa (NFO) 2024 Annual Report. The overturn ratio reflects the percentage of complaints escalated to the ombud where the insurer's initial decision is deemed to have been incorrect. In other words, a low overturn ratio indicates that the insurer is making sound decisions upfront, a strong indicator of fairness and reliability. Burton Naicker, CEO of Miway, says the result reflects the company's consistent and sound claims approach. 'An overturn ratio of 6% - well below non-life industry overturn ratio of 16.5%, as per the NFO 2024 report - affirms the quality and fairness of our claims decisions, something we pride ourselves on. It also means that our clients are getting the right responses and feedback the first time around, reducing the need for external intervention.' The NFO, a newly unified body that amalgamates the former ombud schemes for short-term insurance, long-term insurance, banking and credit, published its inaugural annual report covering over 20 000 resolved cases across the financial services industry. Of these, more than R328 million was awarded to consumers who had been treated unfairly, with over R94 million linked to the non-life (short-term) division alone. Miway has recorded a consistent decline in the number of complaints referred to the ombud over the past several years. From 2017 to 2024, complaints have dropped by more than 50% - a clear sign that ongoing efforts to improve claims management, internal resolution processes and client communications are yielding results. 'Our focus is on continuously improving the customer experience,' says Naicker. 'Whether it's through refining our claims management process, training our staff more rigorously, or making it easier for customers to engage with us, we're committed to making sure our clients feel heard and respected.' For Miway clients, this is all positive news. A low overturn ratio, declining complaints received, and a proactive approach to customer service all point to a business that is delivering on its promise to protect clients' assets, without the added frustration of administrative run-arounds. 'We know that when people claim, they're often under stress,' notes Naicker. 'It's our duty to make the process as fair and efficient as possible. These results show that we're doing just that, and we will continue to build on this foundation, offering great service and products that meet our clients' needs,' he concludes.
IOL News
30-07-2025
- Business
- IOL News
South Africa's growing consumer debt: Economists warn of dangerous borrowing trends
Economists have warned that rising consumer borrowing for essentials like groceries and fuel poses serious risks to household stability. Image: Ayanda Ndamane / Independent Newspapers Economists have warned that South Africans are falling into unsustainable debt by using credit to purchase basic necessities such as groceries, fuel, and electricity. They say this shift is financially dangerous and structurally damaging to household stability. This follows a warning from the National Financial Ombud Scheme South Africa (NFO), which flagged a sharp rise in consumer credit defaults. TransUnion's Q1 2025 Industry Insights Report shows that 41.3% of non-bank personal loan accounts are now more than three months in arrears, the highest serious delinquency rate recorded in over three years. Retail instalment account defaults stand at 27.1%, clothing accounts at 25.9%, and revolving credit at 14.9%. According to the report, uptake of these products is also increasing, with retail instalment credit up 16%, clothing credit up 7.6%, and revolving credit up 5.4%. The NFO says this simultaneous rise in borrowing and missed payments reflects mounting financial strain on households. 'These figures are not just statistics. They reflect the reality of households using credit to survive rather than to grow,' said Kwanda Vabaza, Manager of Adjudication at the NFO's Banking and Credit Division. 'When nearly half of all non-bank loan holders are behind on their payments, the system is under significant strain.' Independent economist Professor Bonke Dumisa cautioned that consumers should avoid credit for daily expenses. 'Ordinary consumers must avoid purchasing groceries or other regular household goods on credit,' he said. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad loading He added that consumers should try to avoid having their credit liabilities above 25% of their total disposable income. Professor Waldo Krugell, an economist at North-West University, noted that while the full scale of the problem is difficult to determine from credit bureau data alone, the pressure on consumers is evident. 'Though consumers have been spending on food, restaurants, clothing, and footwear, there is also something of a cost-of-living crisis. The inflation rate has come down, but price levels are high and salaries have been slow to catch up. In the end, many people spend on credit, essentially living above their means.' Krugell added that the situation is likely to affect broader economic performance. 'At some stage, households will have to apply some unpleasant austerity, and consumer spending as a driver of the economy will take a knock.' While financial institutions remain stable, Krugell said profitability and share prices could decline if consumer defaults rise. He also flagged low levels of financial literacy as a key concern. 'Current regulations and checks are quite good, but there is a big deficit in consumer financial literacy. Most of us know too little about managing our finances well.' The NFO has also raised concerns about reckless lending and urged consumers to lodge complaints with it if they were granted unaffordable loans. THE MERCURY
IOL News
28-07-2025
- Business
- IOL News
Rising debt: calls for greater consumer vigilance
The National Financial Ombud Scheme South Africa (NFO) is concerned about high levels of debt exposure in the wake of the release of TransUnion's Q1 2025 Industry Insights Report, which confirms a troubling trend: credit products commonly used by lower- and middle-income consumers are experiencing rapid growth in both uptake and default rates. Image: File With the dramatic shifting of credit from a tool for upward mobility to a survival mechanism for necessities like food, rent, electricity and transport, alarm bells are being sounded about unsustainable debt levels of consumers. The National Financial Ombud Scheme South Africa (NFO) is concerned about high levels of debt exposure in the wake of the release of TransUnion's Q1 2025 Industry Insights Report, which confirms a troubling trend: credit products commonly used by lower- and middle-income consumers are experiencing rapid growth in both uptake and default rates. With many households relying on credit just to meet basic needs, the NFO has warned of a surge in retail and non-bank loan defaults and urges consumers to beware of reckless lending, which can only place them deeper in debt. FINANCIAL STRAIN According to TransUnion, which explores financial trends in South Africa, non-bank personal loans now reflect the highest rate of serious delinquency in over three years, with 41.3% of account holders falling three months or more into arrears. This represents a sharp 520 basis point year-on-year increase and outpaces the default rate for bank personal loans by over 15%. The statistics for other retail credit products are equally concerning for the NFO. Default rates now stand at 27.1% for retail instalment accounts, 25.9% for clothing accounts, and 14.9% for retail revolving credit. The TransUnion report shows that while more consumers are taking up loans, retail instalment credit is up 16%, clothing credit 7.6%, and revolving credit 5.4%. The simultaneous rise in missed repayments signals growing financial strain on households. Kwanda Vabaza, Manager - Adjudication at the NFO's Banking and Credit Division, said: 'These figures are not just statistics. They reflect the reality of households using credit to survive rather than to grow. When nearly half of all non-bank loan holders are behind on their payments, the system is under serious strain. KNOW YOUR CREDIT RIGHTS 'Many consumers remain unaware of their rights under the National Credit Act (NCA), particularly when it comes to reckless lending.' The Banking and Credit Division of the NFO, led by Nerosha Maseti, has jurisdiction on non-bank credit disputes, covering credit agreements such as store and furniture accounts, microloans, non-bank credit cards, non-bank vehicle finance, non-bank home loans and other forms of credit not issued by banks. Vabaza said: 'We continue to see cases where credit was granted to consumers who clearly could not afford the repayments. This is classified as reckless lending and is prohibited by the NCA. In such instances, consumers are entitled to relief, which may include restructured terms or, in extreme cases, a recommendation by the NFO for the cancellation of the debt. 'The NFO also frequently receives complaints relating to clothing accounts, furniture and appliance credit, store cards, and non-bank personal loans. ''These disputes typically involve issues such as prescription (legally expired debt), incorrect balances, credit bureau listing disputes, fraud, and affordability assessments that were either not conducted or done improperly, leaving consumers burdened with unsustainable debt. 'Consumers have the right to receive credit only when it is affordable and in their best interests. They are also entitled to clear explanations of the total cost and legal consequences of any credit agreement they enter into.' Fortunately, for those who must contend with credit woes, they need not suffer in silence when things go wrong - the NFO is ready to help consumers with their challenges, ensuring financial fairness, transparency and justice in credit-related matters. The NFO offers free alternate dispute resolution, thus protecting and empowering credit-active consumers. 'Where rights are violated, consumers should contact our office. Our services are free and impartial, and we aim to resolve disputes in a way that is fair to both the credit provider and the consumer,' said Vabaza. CREDIT APPLICATION TIPS The NFO encourages all consumers to keep the following tips in mind when using or applying for credit: Only borrow what you can afford to repay, and do not misrepresent your affordability prospects. Before accepting any credit, check your income and monthly expenses to make sure you can manage the repayments comfortably. Avoid using credit for day-to-day expenses: Relying on credit to buy food, fuel, or airtime can quickly lead to debt spirals. Credit should be used wisely, not for survival. Understand all the terms and costs: Ask for a Pre-Agreement Statement and Quotation, which contains a full breakdown of interest rates, monthly repayments, and total costs before signing a credit agreement. Know your rights under the National Credit Act (NCA): You are entitled to fair treatment, proper affordability checks, and clear communication from any credit provider. If these are not followed, you may have a valid complaint. Pay on time and keep track of your accounts: Set up reminders or debit orders to ensure you never miss a payment. Keep a record of all your credit agreements and statements to avoid surprises 'If you are struggling or believe your credit agreement may not have been fair, contact the NFO. We are here to help ensure accountability and to protect your rights as a credit consumer,' Vabaza concluded. The National Financial Ombud Scheme of South Africa
IOL News
24-06-2025
- Business
- IOL News
Financial Ombud gets bank to write off R233 000 home loan arrears after it sold home for R10 000
The National Financial Ombud Scheme South Africa intervened in a complaint after a bank sold a home for R10,000, leading to the cancellation of R233,000 in arrears. Image: File picture. The National Financial Ombud Scheme South Africa (NFO) has emphasised the need for fairness from financial institutions after intervening in a case where a bank sold a home for just R10,000 due to a client's home loan arrears. The intervention of the NFO led to the bank writing off the client's home loan arrears of more than R233,000. The details of the matter are contained in the NFO's recently released 2024 annual report. Between 1 March 2024 and 31 December 2024, the NFO handled 35,855 complaints that was dealt with by its four divisions - Non-life and Life Insurance, Banking and Credit. According to the report, in a complaint handled by the Ombud's banking division, a complainant held a Home Loan account with a bank and the account was in arrears. The report explained that the bank exercised its rights in terms of the home loan agreement and proceeded with legal action to recover the full outstanding balance owing on the account. "Judgment was granted and the property was declared executable. There was no reserve price set by the court for the sale of the property. The bank proceeded to sell the property on auction for R10,000 and the complainant remained liable for a shortfall of R233,241.90 after the proceeds of the sale had been credited to the account." Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ When the NFO investigated the complaint, it was found that the property had been valued at R590,000. The outstanding balance on the home loan account at the time of the sale was R234,541.06. In addition, outstanding rates and taxes on the property amounted to R335,575.12 at the time of the sale. However, the NFO said it was of the view that despite these costs, there was still sufficient value in the property, and that a higher selling price could have been achieved by the bank to ensure that the full outstanding balance on the account was settled. The report said: "Whilst the NFO remained cognisant that the court did not set a reserve price and therefore the bank was not in contravention of any court order, the office exercised our equity jurisdiction and remained firm in its view that it could never be considered fair nor reasonable of a bank to sell someone's home for R10,000 when it has a market value of R590,000.00." The NFO therefore recommended that the bank write off the full shortfall amount. "The bank accepted the recommendation, and the full shortfall of R233,241.90 was written off," the report said. THE MERCURY
The Citizen
21-06-2025
- Business
- The Citizen
Ombud gets R328 million back for disgruntled financial consumers
The National Financial Ombud Scheme handles complaints about banking, life and short-term insurance and credit. The National Financial Ombud Scheme managed to get a staggering R328,5 million back for disgruntled financial consumers in the first year of its existence after all four former financial ombud schemes were combined into a single, one-stop, dispute resolution service. According to its first annual report, the National Financial Ombud Scheme South Africa (NFO) handled an impressive 35 855 complaints through its four divisions, non-life (short-term) and life insurance, banking and credit between 1 March 2024 and 31 December 2024. Reana Steyn, head ombud and CEO of the NFO, says the sheer number of complaints received and the large sum of money recovered are testament to the NFO's effectiveness and commitment to fairness in dispute resolution and the power of independent mediation. 'This recovery of monies helped individuals and families regain lost financial stability, reinforcing the NFO's role as guardian of justice in financial services. The NFO has continued to solidify its role as a pillar in the South African landscape that ensures access for financial consumers to transparent and effective resolution of disputes.' The total amount of R328 550 212,58 that the NFO recovered on behalf of consumers is made up of R29 175 451,14 recovered by the banking division, R2 355 840,20 recovered by the credit division, R202 854 491,24 recovered by the life insurance division and R94 164 430,00 recovered by the short-term insurance division. The NFO resolves complaints on average within 115 days, while the banking division took on average only 52 days to close cases, the Credit division 79 days, the life insurance division 152 days and the short-term insurance division 177 days. ALSO READ: Banking Ombudsman puts R25 million back in consumers' pockets Banking division recouped R29 million for consumers Nerosha Maseti, the lead ombud for the banking division, says in the annual report that despite major internal changes, the banking division adapted seamlessly, handling and resolving complaints at a faster rate than the previous year, while maintaining a strong commitment to fair outcomes. The banking division opened a total of 15 412 cases and closed 11 535 successfully, recovering a total of R29 175 451,14 consumers. Most of the banking cases opened (20%) was against Capitec that had 1 203 complaints, as can be expected as it has the highest number of customers. The NFO founded in favour of consumers in 22% of these cases. FNB came in at a close second with 1 017 cases opened, representing 17% of all cases, with findings in favour of complainants totalling 16%. Standard Bank had 998 cases opened, representing 17% of all cases and 19% of findings in favour of complainants. Nedbank had 881 cases opened, representing 15% of all cases and 22% of findings in favour of complainants, while Absa had 812 cases opened, representing 14% of all cases and 13% of findings in favour of complainants. The top categories in the banking division were current accounts, personal loans, savings accounts, credit cards and home loans, while fraud remained the leading issue in consumer banking complaints, representing 30% of all cases. Complaints related to maladministration were the second highest category and debt-stressed consumers the third, reflecting the ongoing financial challenges consumers have to deal with. ALSO READ: FSCA finds banks do not handle consumer complaints properly Credit division recouped R2.3 million for consumers The NFO's credit division successfully closed 2 040 cases, achieving positive outcomes for complainants in 49% of cases and financial redress totalling approximately R2.4 million. The Retail Credit Solutions (RCS) Group had the highest number of cases opened, totalling 243, representing 17% of all cases opened. The division found in favour of complainants in 44% of the cases. OPCO 365 was in second place with 133 cases opened, representing 9% of all cases, while Edcon Limited had 126 cases (9%) and DMC Debt Management had 121 cases (9%) Howard Gabriels, lead ombud for the credit division, says two matters the division dealt with stood out for their systemic impact during the reporting period were about value-added services (VAS) and minimum payment calculations with a number of retailers. 'A serious concern emerged regarding the application of payments on credit accounts where VAS charges, such as airtime or insurance add-ons were not considered in determining the minimum monthly payments, leading to growing balances despite customers paying what they believed to be the full amount due. 'After we intervened, the affected credit provider agreed to write off inappropriate balances and amend its internal policy to ensure VAS charges are included in future minimum payment calculations.' ALSO READ: Here's what you can learn from Credit Ombud's case file Non-life division recouped R94 million for consumers The NFO's non-life insurance division closed 9 289 cases and recovered R94 164 430.00 on behalf of consumers. Edite Teixeira-Mckinon, lead ombud for the non-life insurance division, says complaints related to motor vehicle insurance accounted for 42% of all the complaints finalised/resolved. This was followed by homeowners' insurance complaints at 27%, commercial complaints at 14%, household contents complaints at 6% and other types of insurance and nonclaim-related complaints, combined at 11%. 'The highest number of complaints about motor vehicle insurance were about claims for accidents, at 62%, followed by warranty and mechanical breakdown claims at 18% and theft and hijack claims at 9%. 'The primary reason for complaints under this category of insurance was claims rejected on an exclusion in the policy. The leading exclusion was failure to prevent or minimise loss or damage, also known as a lack of due care, or recklessness.' Under homeowners' insurance, the highest number of complaints were about claims for loss or damage due to acts of nature at 40%, followed by bursting of water apparatus at 16% and theft and burglary at 8%. The primary cause for complaints was rejected claims based on gradual deterioration, lack of maintenance, or wear and tear, while disputes about the amount claimed were also a key issue. In this division, Santam Limited had the highest number of formal complaints at 684, followed by Standard Insurance Limited at 632, Old Mutual Insure Limited at 613, Absa Insurance Company Limited at 560 and Discovery Insure at 501. Life insurance division recouped R202 million for consumers The NFO's life division finalised 5 977 cases in 2024 and recovered a total amount of R202 854 491,24 for consumers. Denise Gabriels, lead ombud for the life division, says funeral benefits remained the product most consumers complained about, accounting for 45% of complaints. Declined claims were the most common cause for complaints at 56%, followed by complaints about poor service or administration at 34%. In the life division the most complaints were about Old Mutual at 628 formal cases, representing 18% of all complaints, followed by Liberty with 399 formal cases representing 11%, Hollard Life Insurance with 259 cases representing 7%, Metropolitan Life with 216 cases representing 6% and Sanlam Life Insurance Ltd with 188 cases representing 5%. Haroon Laher, chairperson of the NFO Board, says the establishment of the NFO was an act of bravery. 'Bravery in anything we do does not merely mean facing the loudest, or sometimes the most powerful, voices. It requires those involved to listen to the quietest whispers of those who have been wronged. 'It takes courage to confront an issue. It is this very courage, carried out through acts of bravery, that will define the NFO in what it does and achieves.' NOW READ: Funeral insurance tops complaints to ombudsman for long-term insurance
