Crypto complaints on the rise, says Fais Ombud

Investments in cryptocurrencies such as bitcoin are leading to an increasing number of complaints being received by the office of the Financial Advisory and Intermediary Services (Fais) Ombud.

However, assistant ombud Thobile Masina says the office of the ombud is facing a dilemma in finalising and issuing determinations on cryptocurrency complaints because of challenges related to the definition of cryptocurrency and whether it is a financial product or merely an alternative currency.

The latest Fais Ombud annual report lists cryptocurrency complaints among the new trends in the industry.

It says the complaints relate to cases where these currencies are being marketed as mainstream investment solutions; in some cases, the performance is even guaranteed.

But no disclosure is made that these products are unregulated, or what the risks associated with these investments are and the implications this has on the complainant’s investment.

First determination

The report states: “Investigations into a few matters are at an advanced stage and this office is looking to issue its first determination on this type of investment early in its 2019/2020 financial year.”

The report was released earlier this month and covers the Fais Ombud’s financial year to end-March 2019, but the office has not yet issued any determinations on cryptocurrencies.

Masina says the reason it has not made a decision related to any of these complaints is because the office of the ombud is still battling with the definition of cryptocurrencies and whether or not they count as financial products.

She adds that whether cryptocurrencies do or do not fall within the definition of a financial product will determine whether the Fais Ombud has jurisdiction to consider complaints about them.

Masina says that when the ombud initially dealt with cryptocurrency complaints, its view was that they were not a financial product.

It was however then engaged by the Financial Sector Conduct Authority…

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