The FAIS Ombud's Prescription Period: When Does the Three-Year Clock Start?

A client's retirement annuity matures in March 2025. The capital repayment is 30% below what was projected when the policy was sold in 2022. The client contacts the representative, who is evasive. A friend suggests the FAIS Ombud. The client looks up the complaint process and encounters a warning: complaints have a time limit. The question is whether more than three years have passed since the advice was given. The answer requires understanding which date the three years runs from - and it is not always the date the advice was given.

This is the prescription period for FAIS Ombud complaints, and the rule is more nuanced than most clients and exam candidates realise. The three-year window exists

• but it does not always start when people assume it does.

The Prescription Period: What Section 27(3)(a) Actually Says

Under Section 27(3)(a) of the Financial Advisory and Intermediary Services Act 37 of 2002 (FAIS Act), the FAIS Ombud must decline to investigate any complaint relating to an act or omission that occurred more than three years before the date the Ombud's Office received the complaint. However, where the complainant was unaware of the occurrence at the time, the three-year period does not start from the date of the act - it starts from the date the complainant became aware, or ought reasonably to have become aware, whichever is earlier.

The Legislative Framework

Section 27(3)(a)(i): The Hard Three-Year Limit

Section 27(3)(a)(i) of the FAIS Act states:

"The Ombud must decline to investigate any complaint which relates to an act or omission which occurred on or after the date of commencement of this Act but on a date more than three years before the date of receipt of such complaint by the Office."

Two things stand out in this provision. First, the Ombud must decline - this is a mandatory jurisdictional exclusion, not a discretionary one. The Ombud has no power to waive prescription on compassionate grounds. Second, the reference date is the date of receipt of the complaint by the Office, not the date the complainant decided to lodge. This distinction becomes important when the complaint enters the Premature Complaints Handling Process rather than being officially received immediately.

Section 27(3)(a)(ii): The Awareness-Based Trigger

Section 27(3)(a)(ii) modifies the start date immediately:

"Where the complainant was unaware of the occurrence of the act or omission contemplated in subparagraph (i), the period of three years commences on the date on which the complainant became aware or ought reasonably to have become aware of such occurrence, whichever occurs first."

This provision has two components that operate differently and sometimes in tension.

The subjective component - "became aware" - is straightforward. If a client did not know an act or omission occurred, the clock starts running from when they actually discovered it.

The objective component - "ought reasonably to have become aware" - is less forgiving. It does not ask when the complainant actually discovered the problem. It asks when a reasonable person in the complainant's position would have discovered it. A client who received quarterly investment statements showing consistent losses over three years and never read them cannot claim they were unaware. A reasonable person reads their financial statements. The law treats them as aware from the point at which a reasonable person would have investigated.

The provision takes whichever date comes first - either the date of actual awareness or the date of constructive awareness. This means the objective test can accelerate the prescription clock even where the complainant claims to have remained genuinely unaware.

Section 27(2): What Stops the Clock

Section 27(2) of the FAIS Act provides:

"Official receipt of a complaint by the Ombud suspends the running of prescription in terms of the Prescription Act, 1969 (Act 68 of 1969), for the period after such receipt of the complaint until the complaint has either been withdrawn, or determined by the Ombud or the board of appeal, as the case may be."

Once the Ombud officially receives a complaint, the prescription clock is frozen. It does not resume until the complaint is resolved or withdrawn. This is a significant protection - a client who has properly lodged a complaint does not need to worry about prescription expiring while the Ombud conducts its investigation.

The critical qualification is the word official. Section 27(1) establishes that official receipt is a specific determination by the Ombud - not merely the act of submitting a complaint to the Ombud's portal. Before officially receiving a complaint, the Ombud must first verify whether the internal resolution requirement (the six-week FSP period) has been complied with. If it has not, the complaint enters the Premature Complaints Handling Process rather than being officially received. During this stage, prescription may continue to run.

Where People Go Wrong

Treating the date of the advice as the start of the prescription period. This is the most common misunderstanding. A client who received negligent advice in January 2022 does not automatically face a January 2025 prescription deadline. If the financial prejudice only became apparent later - for example, when a structured product matured or a pension fund statement revealed a material shortfall - the three years runs from the date the client became aware of the problem, not from January 2022.

Believing that submitting to the Ombud's portal stops the clock. It does not. Under Section 27(2), only official receipt suspends prescription. Official receipt only occurs after the Ombud has verified that the six-week internal resolution requirement has been met. A client who submits to the Ombud portal before giving the FSP six weeks to respond triggers the Premature Complaints Handling Process - the complaint is forwarded to the FSP, and prescription continues to run until the process is complete and the Ombud officially receives the complaint.

Assuming ignorance of the problem indefinitely extends the period. The "ought reasonably to have become aware" standard is an objective test. A client who received clear warning signals - underperformance notices, negative valuations, industry news about a product - but failed to act on them may be taken to have been constructively aware of the potential claim long before they actually investigated. Claiming subjective unawareness does not override the objective standard.

How This Works in Practice

The delayed discovery

A representative places a client's retirement savings into a structured note in March 2022 with a projected 18% return. The note matures in March 2025, returning 70% of the invested capital. The client has suffered a real loss for the first time. The client contacts the Ombud's office in April 2025.

The prescription period has not expired. The client was unaware of the financial prejudice until the product matured - there was no prior indication that the capital was at risk. Section 27(3)(a)(ii) starts the three-year clock from when the client became aware of the occurrence: March or April 2025. The complaint is well within time.

This scenario frequently appears in RE5 papers. The exam tests whether candidates correctly identify the start of the prescription period as the date of awareness rather than the date of the advice.

The warning signs ignored

A client's quarterly investment statements consistently show a portfolio declining in value from January 2022. The client files the statements without reading them. In March 2025, a friend mentions the product has been investigated for mis-selling, and the client reviews the statements for the first time. The client lodges a complaint with the Ombud in April 2025.

Whether this complaint is in time turns on the objective test. A tribunal would ask: when would a reasonable person receiving these statements have sought advice or made enquiries about the declining portfolio? If the answer is early 2022 or 2023, the three-year period may have already expired by April 2025.

The client's subjective claim that they were unaware does not resolve the question. The "ought reasonably to have become aware" standard imposes a duty to pay reasonable attention to financial documents received.

The late rush to the Ombud

A client became aware of potential negligent advice in December 2022. By October 2025, they have not yet contacted the FSP. Knowing the December 2025 prescription deadline is approaching, the client submits a complaint directly to the Ombud's portal in October 2025.

This client has a problem. Submitting to the portal does not trigger official receipt under Section 27(2) - the complaint enters the Premature Complaints Handling Process because the FSP has not yet been given six weeks to respond. The complaint is forwarded to the FSP, and the six-week clock begins. Prescription continues to run during this period. If the FSP's six-week window expires in November or December 2025 and the Ombud only officially receives the complaint at that point, the situation is tight. If official receipt occurs after December 2025, the complaint may be out of time.

The safer course was to write formally to the FSP in August or September 2025 - well before the prescription deadline - to ensure the six-week FSP period expired before the prescription cut-off.

Practical Implications

For clients with a potential complaint - do not assume the prescription period started on the date you received the advice. If you only became aware of the financial loss later, the clock may have started much more recently. However, do not take comfort from this indefinitely: the objective "ought reasonably to have become aware" standard means the clock may have started earlier than you realise if there were warning signs you failed to act on. If you are uncertain whether you are in time, contact the Ombud's office for guidance before submitting a formal complaint.

For clients approaching a prescription deadline - write to the FSP formally before submitting to the Ombud. Official receipt of the complaint by the Ombud - which suspends prescription - requires the six-week FSP process to run first. Leave sufficient time for the FSP's six-week period to expire before your prescription deadline.

For representatives and FSPs - the prescription period is an important compliance context. A client complaint that arrives late does not automatically disappear. The client may argue they only became aware of the loss at a later date. The more relevant safeguard is ensuring proper documentation of what information was provided to the client at the time of the advice - because this documentation will determine whether the client "ought reasonably to have become aware" at an earlier point.

For exam candidates - RE5 scenario questions on prescription test three things: (1) the basic 3-year limit under Section 27(3)(a)(i), (2) the awareness- based start date under Section 27(3)(a)(ii), and (3) the distinction between submitting to the Ombud and official receipt under Section 27(2). A scenario where a client claims to have been unaware of a loss for years is a signal to apply Section 27(3)(a)(ii), not just Section 27(3)(a)(i).