Crypto Ombudsman Constituted In South Africa
Through the Federal Legislature of Financial Advisory and Intermediary Services (FAIS) Act, Government in South Africa can establish offices of the Ombudsman.
Under FAIS, South Africa established FAIS Ombud and equipped it with the responsibility of resolving disputes in the financial sector.
Now recently the scope and ambit and jurisdiction of FAIS Ombud have been widened primarily with regard to addressing digital asset issues.
It has been informed by FAIS Ombud that all matters concerning digital currencies/cryptocurrencies can be enquired into and decided by the authority.
The authority has been authorized to receive complaints against financial service providers who render advice on digital currencies from time to time.
Crypto is classified as a “Financial Product”
Like the rest of the countries, South Africa also was concerned about how to regulate digital currencies and assets. The first challenge, the Government had to deal with in this connection was the classification of digital currencies.
Through a law passed recently in South Africa, cryptocurrencies have been defined and classified as “financial products”.
It is in this background that FAIS Ombud has been given an additional charge for resolving crypto disputes and complaints. Otherwise, FAIS was functioning with a limited scope of dealing with complaints by or against financial institutions.
Complaint Filing Restrictions
FAIS Ombud has informed the public that it can only receive complaints lodged against financial service providers only.
This means that if a dispute or complaint is against a crypto investment firm, then FAIS Ombud has no jurisdiction to interfere.
However, in case a crypto investment firm falls within the definition of ‘FSPs’, then FAIS Ombud is authorized to try the complaint.
Furthermore, only those complaints shall be tried which have been registered against those financial service providers defined under the General Code of Conduct.
South African ‘General Code of Conduct’ concerns authorized financial service providers which are classified as ‘FSPs’.
Under the said code, FSPs are required to make all material disclosures to the general public before offering any financial product.
Earlier Complaints
Prior to FAIS Ombud, the charge of dealing with crypto complaints was within the exclusive domain of the Financial Sector Conduct Authority (FSCA).
However, the crypto dispute resolution responsibility of FSCA was re-assigned to FAIS Ombud on 19th October 2022.
The complainants however submitted several complaints to FAIS Ombud even before the authority was assigned jurisdiction. Consequently, the complaints submitted prior to 19th October were subsequently dismissed by FAIS Ombud.
While dismissing complaints FAIS Ombud observed that it lacked the jurisdiction which was entrusted to it only after 18th October 2022.
The complainants were directed to invoke appropriate remedies before a competent forum. They were further directed that FAIS Ombud cannot even entertain fresh complaints as it has already made its decision on them.
According to the office of FAIS Ombud, only three complaints have been lodged before the authority since 19th October 2022.
The authority told that these three complaints shall be taken up, inquired into, and decided according to law. They will be taking all the necessary actions in order to run inquiries and resolve the problems.
The processes and procedures have been laid out in the most detailed manner. Therefore, the FAIS Ombud teams know exactly how things would work before they are resolved.
Who Can File a Complaint?
Any person who is aggrieved with a financial service provider with regard to crypto can file a complaint with FAIS Ombud. They can share their concern through the particular portal and provide all the information about their complaint.
They can share all their concerns, which are then reviewed by the FAIS Ombud who look into the matter to get to the bottom of it.
For filing a complaint, the entire process and mechanism have been provided on the official webpage of FAIS Ombud. The lodging of a complaint however is an e-filing process and can be submitted while using FAIS Ombud’s online portal.
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