Ombud warns overspending bank customers

23 April 2008

"New" at the helm Advocate Clive Pillay, Ombudsman for Banking Services (OBS), reported at the release of its annual report for 2007 in Johannesburg earlier today, that certain set-backs were experienced last year. These included an office break-in where computers and file servers were stolen resulting in the loss of data and a subsequent fire in the building resulting in lost production.

Notwithstanding these setbacks, improved efficiency has ensured that stakeholders were not unduly detrimentally affected in 2008. The OBS team still finalised 98% of complaints received within six months of the opening of the file and awarded payment of R7.2 million by the banks to customers who had complained. 58% of determinations were made in favour of complainants.

Despite significant increases in most areas of activity, the use of an external joint call centre set up by the OBS in 2006, to assist members of the public to direct their complaints to the correct alternative dispute resolution office, led to a decline in the number of queries dealt with by the office internally (20 429 OBS queries handled by the call centre). In addition, the 51% decrease in the number of cases requiring further internal investigations bears testimony to the success of the OBS and the commitment by the banks to settle disputes internally thereby reducing the number of complaints referred to the office.

These are significant achievements, given the OBS' raison d'etre for existence, being to provide a quick and cost efficient dispute resolution mechanism, free of charge, as an alternative to the courts.

Whilst the top three causes of complaints by customers have remained unchanged (maladministration, unfair treatment & fraud), two new complaint categories have been added - reckless lending and phantom withdrawals. The incumbent Ombudsman Advocate Clive Pillay commented that looking ahead the aggregate of the recent interest rate hikes, the "spill over" effect of the sub-prime crisis and legal disputes regarding the interpretation and application of the National Credit Act are expected to lead to an increase in the number of matters requiring investigation. He cautioned banks customers to spend money prudently and to reduce their reliance on credit cards.

In cases of customers being over indebted, he advised banks to ensure that they adhered to the stipulated procedures as contained in the National Credit Act before embarking upon debt enforcement steps.

The OBS' concerted effort to market itself to all stakeholders has paid dividends. The OBS will continue to tap into all communities in South Africa. This role will become more important as the movement to "bank the unbanked" gathers momentum.

The OBS will continue to strive to be a credible and respected organisation acknowledged for its impartiality.