FSCA Exposes Systemic Failures in Financial Complaint Handling

April 1, 2025 Dubicly

A landmark Financial Sector Conduct Authority (FSCA) survey has uncovered alarming deficiencies in how South Africa’s financial services providers handle customer complaints, revealing an industry-wide pattern of delayed responses and inadequate resolution systems. The regulator’s sweeping review examined practices across 247 licensed institutions.

Critical Compliance Failures

42% of providers miss mandatory 48-hour complaint acknowledgments
67% operate without dedicated complaint teams, overburdening frontline staff
Average resolution time blows out to 87 days versus required 30-day standard
Only 28% maintain proper tracking systems, risking lost complaints

Worst-Performing Sectors

Short-term insurance: 53% non-compliance with basic requirements
Credit providers: 61% fail to issue written final responses
Investment firms: 47% neglect informing clients about ombud recourse

Consumer Harm Quantified

✓ R4.2 billion in disputed funds trapped in unresolved cases
✓ 73% of complainants report unsatisfactory outcomes
✓ Elderly and low-income clients disproportionately affected

Imminent Regulatory Action

The FSCA has announced sweeping reforms:
1) Mandatory audits commencing October 2024
2) New competency certificates for complaint handlers
3) Radically increased fines (up to 10% of annual turnover)

“These findings expose an industry-wide culture of complaint suppression rather than fair resolution,” stated FSCA Commissioner Unathi Kamlana. The regulator will name non-compliant firms in its upcoming public report.

Structural Weaknesses Exposed

89% of smaller providers rely on error-prone spreadsheet tracking
56% of complaint staff receive no specialized training
94% of firms fail to integrate complaint data with risk management systems

Coming Consumer Protections

Q3 2024 will see:
✓ Public performance dashboards rating providers
✓ Streamlined digital complaint portals
✓ Strict resolution timeframe disclosures

The revelations come as South Africa’s financial ombuds offices face record backlogs, with some complaints taking over 14 months to resolve. Industry associations have pledged cooperation but warn that systemic improvements will require significant investment in systems and training.