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FAIS Ombud Dealing with complaints submitted to the Ombud for FSPs
An adviser properly assessed a client as an aggressive investor and recommended an equity fund suited to her. A year later a global market crash cuts the value by 30%. She complains to the FAIS Ombud. What is the likely outcome?
RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.
- a) No award: the loss came from the market, not from the FSP's conduct.Correct
- b) Half compensation, because the loss is shared between the two of them.
- c) No award, because the Ombud has no jurisdiction over investment complaints.
- d) Full compensation, because the FSP chose the fund that lost value.
Why this is the answer
The Ombud deals with loss caused by an FSP's failure to comply with FAIS, such as unsuitable advice or poor disclosure. Here the advice was suitable and the loss came from market movements, so there is no basis for an award. The Ombud does deal with investment complaints; it simply does not compensate ordinary market risk.
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