Store account add-ons, ‘lack of due care’ car claims among top disputes for consumers

The National Financial Ombud Scheme (NFO) has placed R328.5m in the hands of aggrieved consumers in its first year of operation.

Of those who complained about financial institutions, common targets were:

• car damage claims;
• funeral policies; and
• extras added onto retailers' accounts.

The ombud's office handled 35,855 complaints between March 1 and December 31 2024 across its four divisions: non-life and life insurance, banking and credit.

Reana Steyn, head ombud and CEO of the NFO, said the sheer number of complaints received and the large sum of money recovered are testament of the NFO’s effectiveness and commitment to fairness in dispute resolution and the power of independent mediation.

“The recovery of monies has helped individuals and families regain lost financial stability, reinforcing the institution’s role as a guardian of justice in financial services,” she said.

Non-life insurance

The non-life insurance division of the NFO closed 9,289 cases. A total of R94m was recovered on behalf of complainants.

Edite Teixeira-Mckinon, lead ombud: non-life insurance division, said of all complaints finalised/resolved during the year:

• complaints related to motor vehicle insurance accounted for 42%; 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%.

Motor vehicle insurance disputes

Regarding motor vehicle insurance disputes, Teixeira-Mckinon said the highest number of complaints considered related to:

• 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 the motor category of insurance was claims rejected on an exclusion in the policy, the leading exclusion being the failure to prevent or minimise loss or damage, also known as a lack of due care or recklessness,” she said.

Homeowners’ insurance

Under homeowners’ insurance, the highest number of complaints related to:

• claims for loss or damage due to acts of nature at 40%; followed by
• the bursting of water apparatus at 16%; and
• theft and burglary at 8%.

The primary cause for complaints under the category was:

• the rejection of claims based on gradual deterioration;
• lack of maintenance or wear and tear; and
• disputes related to the quantum of the claim.

Commercial, household contents and other complaints

The companies with the highest number of formal complaints opened were:

• Santam Limited 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

The life division of the NFO finalised 5,977 cases in 2024. The total amount recovered was R202.8m.

Denise Gabriels, lead ombud: life division, said funeral benefits remained the product most complained about, accounting for 45% of complaints. The most common causes for complaints were

• claims being declined; at 56%; followed by
• poor service or administration, at 34%.

Of the five life insurance companies that received the most complaints:

• 628 formal cases were opened against Old Mutual Life Assurance Company, representing 18% of all complaints opened;
• Liberty Group Limited had 399 formal cases opened, representing 11%;
• Hollard Life Insurance Company had 259 cases, representing 7%;
• Metropolitan Life had 216 cases; and
• Sanlam Life Insurance Ltd had 188 cases opened.

Credit

The credit division of the NFO successfully closed 2,040 cases, achieving positive outcomes for complainants in 49% of cases. This resulted in financial redress totalling R2.35m. The highest number of cases were opened with:

• the Retail Credit Solutions (RCS) Group, which had the highest number of cases opened, totalling 243, representing 17% of all cases opened;
• Opco 365 had 133 cases opened, representing 9% of all cases opened;
• Edcon Limited had 126 cases opened, 9% of all cases opened; and
• DMC Debt Management had 121 cases opened, 9% of all cases opened.

Findings in favour of complainants totalled 44%.

Howard Gabriels, lead ombud: credit division, said two matters that stood out with a number of retailers for their systemic impact during the reporting period were:

• value-added services (VAS); and
• minimum payment calculations.

“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,” he said.

“This led to growing balances despite customers paying what they believed to be the full amount due. Following our intervention, 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.”

Banking

The banking division opened 15,412 cases, of which 11,535 cases were successfully closed — R29m was recovered. Of the five banks with the highest number of cases opened:

• Capitec led with 1,203. This represented 20% of all cases opened, as can be expected for the bank with highest number of customers by far;
• FNB came in at a close second with 1,017 cases opened, representing 17% of all cases opened, with findings in favour of complainants totalling 16%;
• Standard Bank had 998 cases opened, 17% of all cases, with 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; and
• Absa had 812 cases opened, 14% of all cases with 13% of findings in favour of complainants.

Findings in favour of complainants totalled 22%.

The categories of complaints that kept the banking division most busy were, in order:

• current accounts;
• personal loans;
• savings accounts;
• credit cards; and
• home loans.

The leading issues in consumer banking complaints were:

• fraud, representing 30% of all cases;
• maladministration; and
• debt-stressed consumers, reflecting their ongoing financial challenges.

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