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Consumer protection is a very important issue in a country where the majority of consumers are classed as vulnerable. Even the middle class needs protection in tough economic times, where they have to turn over every cent before spending it.

Ombuds fulfil an important role in consumer protection, and have done so in South Africa for many years. That is why it is so disconcerting to find two recent reports indicating that two ombud offices in the housing sector are unable to function.

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The Human Settlements Ombudsman, as well as the Community Schemes Ombud Service (CSOS) are currently not offering the service they were created for: protecting consumers. Ombuds can help consumers resolve problems in less time and without spending copious amounts of money on legal services.

The role of an ombud

Ombuds help consumers resolve their complaints in about 120 countries as independent, impartial offices, with the authority and responsibility to receive, investigate or informally address complaints and when appropriate, make findings and publish reports.

The aim of these ombud offices are to resolve particular complaints and make recommendations where appropriate to improve the general administration of the particular industry. 

Worldwide, the term “ombudsman” can only be used if the ombud is independent from the entities investigated, accessible, fair, publicly accountable, effective and impartial.

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They generally have the power to accept or decline a complaint and act on it, gather or demand relevant information, resolve issues, facilitate, negotiate and mediate, recommend a resolution and initiate legislation. 

Ombud offices also receive complaints about allegations, omissions, maladministration, improprieties and other systemic problems, conduct inquiries, identify patterns and trends and educate consumers.

South African consumers have been served well by a variety of ombuds over the years, such as the Ombud for Financial Services Providers, the Press Ombudsman, Credit Information Ombud, Long Term Insurance Ombud, Short Term Insurance Ombud, Motor Industry Ombudsman and Ombud for Banking Services.

Human Settlements Ombudsman

The Human Settlements Ombudsman, whose mandate is to provide an alternative dispute resolution (ADR) service, has been waiting for months for the resources necessary to establish the office.

According to the department of human settlements, the office was established to improve openness and transparency, increase public confidence in government, improve efficiency, provide an accessible mechanism for redress in the sector, reduce complaints and promote the constitutional right to housing.

It is supposed to resolve disputes between communities, individuals and service providers against municipalities and provinces, between various spheres of government and between government entities and service providers.

The office must also resolve government home ownership disputes, complaints between individual homeowners and government entities, complaints between the Estate Agency Affairs Board and real estate agencies and complaints between the CSOS and body corporates.

Housing consumers are again left with only one way to resolve their problems: through the courts. If you cannot afford legal help, your complaint goes nowhere.

Community Schemes Ombud Service

Sectional title property owners were pleased when the CSOS was established in 2016 to regulate the conduct of parties within community schemes and ensure their good governance. Although this service is provided free of charge to consumers who have complaints, they pay for it indirectly through their levies. Their contributions are used to fund the CSOS.

However, it has now been reported that the CSOS has lost about R80m of homeowners’ money. An entity that has been mandated by law to check the audited financial statements of registered community schemes has lost the money paid by these schemes.

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The acting chief ombud and chief financial officer were suspended “following allegations of gross negligence, dishonesty and dereliction of duty in regards to an R80m investment in VBS Bank and failure to provide relevant information to the board relating to the investment of surplus funds”. There are also allegations of irregular spending running into millions. 

Unfortunately the CSOS’s woes did not end with the missing millions. It has been reported that adjudicators for disputes arrive late or not at all and that the CSOS does not adhere to its own practice directive timelines.

Poor decisions are referred to the High Courts, where consumers have to fork out lots of money to have decisions reviewed. They are back to square one.

So far only a small number of community schemes have registered with the CSOS. Who will blame schemes who refuse to consider joining? And with no Human Settlements Ombudsman, where do you complain about the CSOS?

Consumer protection must include free and accessible alternative dispute resolution services to enable consumers to complain when they are treated unfairly. Consumers do not have the time or the money to fight these disputes in court. They need disputes about their homes to be settled quickly and efficiently. And they need the gatekeepers to be accountable. 

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