Ombud services that affect sectional title insurance

[Updated: 23 June 2025]

There are three main ombud services in South Africa that deal with disputes involving insurance and financial loss in the context of community schemes. These are:

• The Community Schemes Ombud Service (CSOS)
• The Ombud for Financial Services Providers (FAIS Ombud)
• The National Financial Ombud Scheme (NFO) has replaced the former Ombudsman for Short-Term Insurance (OSTI), among others.

In this article, we briefly explain their roles and differences, particularly as they relate to sectional title insurance.

CSOS – Community Schemes Ombud Service

The Community Schemes Ombud Service (CSOS) was established in terms of the Community Schemes Ombud Service Act, 2011 (Act 9 of 2011) to regulate the conduct of parties within community schemes and to ensure good governance.

Classified as a Schedule 3A public entity under the Public Finance Management Act, CSOS operates under the authority of the Minister of Human Settlements.

In terms of section 38 of the CSOS Act, any person in a community scheme may apply to CSOS for the resolution of a dispute through mediation or adjudication.

Disputes may relate to:

• Financial issues
• Governance matters
• Meetings and decision-making
• Use of common and private areas
• Management services
• General disputes between parties in the scheme

CSOS provides an alternative to court litigation through:

1. Conciliation – an independent facilitator helps the parties reach an agreement.
2. Adjudication – a binding decision is made by an independent adjudicator.

More information about CSOS: www.csos.org.za

FAIS Ombud – Financial Advisory and Intermediary Services

The FAIS Ombud deals with complaints against financial service providers (FSPs), such as brokers and advisors, particularly in cases involving unsuitable or negligent advice.

Established under the Financial Advisory and Intermediary Services Act (FAIS Act), the FAIS Ombud investigates complaints where a client believes they suffered financial prejudice due to inappropriate advice, lack of disclosure, or failure to follow the FAIS Code of Conduct.

Trustees and managing agents should note that:

FSPs must provide compliant advice and maintain a written record of advice.

Where a scheme’s loss results from poor advice (e.g., underinsurance or incorrect product type), a complaint may be laid with the FAIS Ombud.

The complaint may lead to mediation, or if unresolved, to a binding determination.

More information: www.faisombud.co.za

NFO – National Financial Ombud Scheme

Replaces OSTI and other financial ombuds as of 1 March 2024

The National Financial Ombud Scheme of South Africa (NFO) is now the centralised ombud for most financial complaints, including those involving short-term insurance, banking, credit, and long-term insurance products.

NFO was formed by merging the Ombudsman for Short-Term Insurance (OSTI), Long-Term Insurance Ombud, Credit Ombud and the Banking Ombud.

The NFO is independent, free to consumers, and recognised under the Financial Sector Regulation Act. Its purpose is to resolve complaints in a fair, informal, and cost-effective manner, especially useful for disputes relating to insurance claim rejections in community schemes.

Types of complaints relevant to sectional title insurance include:

• Rejected building or household insurance claims
• Disputes over settlement amounts
• Delays or poor service from insurers
• Claims related to common property or trustee-authorised claims

In the case of a dispute involving a rejected claim:

If trustees support the owner’s position and believe the insurer was wrong, they can jointly submit a complaint to the NFO. Where the owner’s complaint is not supported by the trustees, the trustees should still attest to the complaint; however, they should add their comments or opinions on the matter.

If the claim rejection of an owner is found to be because of negligence on the part of the body corporate, the owner may seek recourse from the courts and/or CSOS.

If the rejection appears valid, but the loss is rather due to poor insurance advice, a complaint may end up being laid with the FAIS Ombud.

More information about the NFO: www.nfosa.co.za

In summary:

• CSOS handles disputes within the community scheme itself.
• FAIS Ombud addresses complaints about advisory failures and poor insurance advice which have caused loss.
• NFO (formerly OSTI) manages disputes involving insurer conduct, such as claim handling or policy interpretation. In other words, mainly disagreements over rejected claims.

Trustees need to understand these distinctions to help owners or managing agents know where to turn when disputes arise.