Banking complaints on a meltdown

03 April 2009

"In spite of the global economic meltdown, the South African banking fraternity has their finger on the pulse during these troubled economic times when handling your banking complaints," said Advocate Clive Pillay, Ombudsman for Banking Services (OBS), at the release of their Annual Report today.

This is evidenced by a decrease of 34% in cases received by the OBS in 2008. The total number of files decreased due to the success of the referral project initiated in June 2008. By referring bank customers to the banks' dedicated dispute resolution departments first before opening a file, many simpler complaints were resolved by the banks without the intervention of the OBS.

The current challenging economic climate has not stopped the banks from becoming innovative and in covering new markets. This innovation can spur criminal activity as demonstrated by some of the more complex cases being handled by the OBS.

In 2008 fraud accounted for 8% of the OBS number of files closed. Seven cases proceeded to the OBS final recommendation stage in 2008. All of these were against Standard Bank and involved internet banking fraud related complaints.

"As the banking public becomes more vigilant, our role in encouraging more caution will become even more important as a growing number of unbanked consumers are brought into the formal financial fold," said Pillay.

There has been an increase in the amounts awarded as compensation to customers compared to 2007. The reason for this is the increase in mortgage bond related claims received, which involve higher amounts. A total of 857 files were closed with regard to mortgage finance related complaints, with 63% of these complaints awarded in favour of the bank and 37% in favour of complainants.

The OBS continues to demonstrate its role as an integral part of the banking environment. An illustration of this was prompted by the dubious manner in which the legal principle of set-off was being implemented by certain banks. Entire salaries were appropriated to meet obligations on other accounts held by the banks that had fallen into arrears in certain cases.

"In 2007, we stated that we would not make any recommendations prohibiting banks from applying this law, but circumstances forced us to reconsider," said OBS Chairperson Advocate John Myburgh SC. The OBS urged the main culprit to adjust their set-off policy in the interests of customer fairness.

Banking consumers can rest assured that the OBS is committed to ensuring a quick and efficient dispute resolution service to all banked customers. In 2008 a total of R9million was recovered from the banks.

Read the 2008 Annual Report of the Ombudsman for Banking Services here...