Annual report for 2006

05 March, 2007

The Ombudsman for Banking Services (OBS)' annual report for 2006 was released at an exclusive media briefing in Johannesburg on 5 March 2007.

The Ombudsman, Advocate Neville Melville, remarked that the fact that his office is now regulated by statute and recognized as an ombuds scheme in terms of the Financial Services Ombud Schemes Act should reassure anyone who might still be in doubt as to the office's neutrality. In practical terms, however, the change will have very little impact on how the OBS does business because the office has always aspired to emulate the best practices available in the ombudsman field internationally.

Of much greater import is the inclusion of the OBS as a role player in the National Credit Act that will dramatically alter the credit landscape. The OBS will be the last resort before a bank customer takes a matter to the regulator. Although the determinations of the Ombudsman have been contractually binding on the banks since the office was restructured in 2000, for the first time this will have the backing of legislation. Any settlement achieved through the process may be made a consent order by a court.

Dealing with the statistical information for 2006, Melville indicated that the increase in complaint numbers had slowed down to an increase of 10% over the previous year, the total number of new files opened being 4 493. The number of enquiries actually decreased for the first time, from over 17 000 in 2005 to 13 536 last year, a 21% decrease. This was thanks to the introduction of the option on the OBS automated answering service of going through to the bank's internal complaint specialists, to cater for those persons who have not yet tried to resolve the complaint directly with their bank.

Another initiative launched at the end of the year was the joint financial service ombuds call centre, 0860 ombuds (0860 662 837).

For the first time, the numbers of complaints per bank were presented against the backdrop of the comparative net assets of the respective banks, to give a more balanced view.

As far as the types of case were concerned, mortgage finance related matters had been displaced by ATM related complaints as the top category (17% and 20% respectively). It is heartening that the banks improved their processing of mortgage bonds following the OBS having raised its concern with them during 2005.

In view of the OBS's expanded role in terms of the Financial Services Ombud Schemes Act of reporting on issues to the representative body of the banks as well as the statutory authority, the report considers issues that were previously raised and those raised during the course of the year, such as the apparent rush to extend credit to customers ahead of the implementation of the national credit act. The banks have responded to the latter by developing a code of practice.

Another instance in which the OBS was able to pass on information gleaned from complaint trends was its testimony before the Competition Commission on Bank Fees.

The OBS commissioned an independent user satisfaction survey, the overall results of which placed it ahead of other leading South African and international institutions.

Advocate Melville closed by announcing that he would be leaving the OBS at the end of April 2007, after a stint of seven years at its helm. He is the longest serving South African ombudsman and his tenure has overlapped that of three Short-term Insurance Ombudsman.