ATMs

Case 1
The complainant was the victim of a scam at an ATM. His card and PIN were later used to make a pin pad withdrawal at a teller. The complainant was found to have been negligent in accepting help from a stranger and in letting the stranger see his PIN. However the bank did not specifically inform the complainant regarding the possibility of pin pad withdrawals and the complainant was not aware of the risk, having never made such a withdrawal. It was found that the complainant had been exposed to greater risk than the bank had informed him of such facility. The bank reimbursed the complainant half of his loss.

Case 2
The complainant was the victim of an ATM scam whereby the ATM card reader is rigged to retain the card. The victim leaves without the card thinking the ATM has lawfully retained it. The thief, having observed the PIN when the complainant entered it, then retrieves the card and uses it for fraudulent withdrawals. The complainant immediately phoned the bank and took steps to prevent anyone from approaching the ATM. It was found to be highly likely that the complainant entered her PIN without waiting to be prompted to do so by the ATM. She was thus negligent to a certain degree. However, she thereafter took immediate steps to prevent her loss. Our recommendation that the bank reimburse her for half of her loss was followed.

Case 3
The complainant approached an ATM in order to make a withdrawal. The person ahead of him at the ATM was just completing his transaction, and was removing his card. The complainant approached the ATM and noticed that the screen did not return to the screen usually indicating the beginning of a transaction and requesting one to enter your card. Instead the screen requested a ten-digit number. The complainant was about to walk away, thinking that the system was down, when the aforesaid person came to his assistance and suggested that the machine had the same problem when he transacted, but that the complainant should enter his PIN number and the machine would then function in a normal manner. Although suspicious, the complainant accepted assistance from the stranger. The ATM screen did not change at all, and it became apparent, to the complainant, that his card was retained. He attempted to cancel the transaction, to no avail. The stranger disappeared as soon as the ATM accepted his card. The complainant immediately reported the incident through contacting the bank's toll free number from his cellular telephone, and stopped his card. The criminal managed to withdraw funds up to the complainant's credit limit, minutes, prior to the complainant stopping his card. As far as we are aware and based on what we have been shown one cannot access an ATM without the correct card and PIN. This is a typical card swapping scenario where the criminal under the pretence of rendering assistance, swap's the complainant's card and obtains his PIN number, in this instance, as complainant entered his PIN number without the ATM prompting him to do so. The bank cannot be said to be liable, as the complainant was the victim of a criminal who obtained both his card and PIN. The complainant was negligent in allowing a stranger to assist him and by entering his PIN without the ATM prompting him to do so.

Case 4
The complainant attempted to make a withdrawal from an ATM machine. The complainant's card was retained by the ATM machine, and despite him pressing the cancel button; he was unable to retrieve his card. The complainant immediately rushed home to report the incident and stop his card via the toll free number of the bank. The complainant was informed that funds were withdrawn from his account within minutes from him leaving the ATM, in an amount equal to his daily withdrawal limit. The same criminals more than likely observed keying in his PIN number, subsequent to his card being retained in an ATM machine, rigged the complainant. In this instance the complainant more than likely entered his PIN number without being prompted to do so, constituting negligence. The bank has a duty to provide safe and secure payment systems. Criminals rigged the bank's ATM machine in order to enable them to obtain the complainant's card. We suggested that the bank bears 50% of the loss of the fraudulent withdrawal.

Case 5
A complainant went to withdraw money from an ATM, but found that his card popped out when he tried to insert it. A well-dressed person approached him to 'assist' mentioning that he had had a similar problem at an adjoining ATM. The complainant suddenly realised that his card had been stolen from him. He first tried to locate the thief and rushed to report the loss of the card by getting his wife to telephone the bank's emergency number on her cell phone. He discovered later that two withdrawals of R1000 each had been made from his account. One was made shortly after the card was stolen while the other was made on the following day. The bank refunded the latter amount to him, as the card should have been stopped by then. However, the former amount was not refunded because the thief managed to withdraw the funds before the card was cancelled and the complainant had been negligent in accepting help from a stranger and apparently keying in his secret PIN number in front of him.

Case 6
Complainant had her card stolen from her purse / shopping bag. On realising that her card was stolen she immediately contacted the Lost Card Division. She was advised that funds were fraudulently withdrawn between her discovering that her card was missing and her reporting it. Complainant states that she gave no-one access to her PIN number and that the document containing her PIN number was destroyed when the card was issued initially. The complainant holds the bank liable for her loss. As far as we are aware and based on what we have been shown, one cannot access an ATM without the correct card and PIN. The most likely conclusion we could come to is that the complainant probably compromised her PIN number by keeping it written down in her handbag with her card, constituting negligence. The bank could not have prevented the theft of the complainant's card, but prevented further loss, the moment they were informed to stop the card.

Case 7
This office dealt with an ATM rigging matter in which the complainant's representative indicated that "she was alone and is adamant that she did not speak to no-one, nor did she ask bystanders for help". The bank furnished us with the video footage of the incident that clearly indicated that she spoke to two other people and two security guards when she realized that her card was stuck. The complainant was dismissed on the grounds that the complainant misled this office as to the facts of her complaint.

Business finance

Case 1
The complainant applied for a long-term commercial loan at the Bank. He was not asked to complete an application form. The application was declined after 4 weeks and only after his numerous requests to the Bank for a response to it. The complainant alleges that his white neighbour was granted a loan on a vacant piece of land for the same amount whereas his was declined on land that had structures on it. The complainant therefore believes that the bank discriminated against him on the basis of his race. The bank claims that the declining of the said loan was based on their purely commercial discretion and that we thus had no jurisdiction to intervene. The complainant has failed to provide us with any concrete evidence of the allegations of racial discrimination. We have addressed questions to the bank relating to the delay in response to the complainant as well as to the fact that if the it was a policy decision than surely the complainant could have been advised of same sooner. In our Initial Assessment we made an award of R1 000-00 to the complainant for distress and inconvenience.

Cash/cheque scam

Case 1
Claim 1
The complainant sold a computer to an unknown person on the understanding that it would only be delivered once cash had been paid into his bank account. A deposit slip reflecting a deposit of R10 000 cash was handed (not faxed) to him. As the bank was closed, the complainant established at an ATM that the amount reflected in his account. The computer was handed over. The deposit turned out to be of a stolen cheque and not cash. The name of the drawer of the cheque appeared on the original deposit slip, but not on the duplicate.

Claim 2
On the strength of the first transaction, the complainant sold another computer to the "brother-in-law" of the same person and was paid by cheque. The complainant said he would not have entered into the second contract if the teller had not been negligent in respect of the first transaction. The Bank indicated that the complainant was a victim of a scam and referred to certain markings on the duplicate copy of the deposit slip. It contended that people should exercise extreme caution before releasing their goods to unknown customers: The complainant was accordingly grossly negligent. The duplicate deposit slip was sent by the Office to the forensic department of the S A Police, which could find no indication of tampering. This information, coupled with a visual examination of the duplicate deposit slip, lead the Office to conclude that nothing had been written in the block provided for the drawer's name. The Bank does not dispute that the same teller stamp appeared on both the original and duplicate copies of the deposit. From a study of decided case law, the Office concluded that a banker has a duty to see that duplicate deposit slips accurately reflect the amount of cash received and that the bank was delictually liable for its failure to take reasonable precautions in this regard. The Office found against the complainant on the second claim on the grounds that he should have taken greater precautions himself. A different decision may have been reached had the bank led the complainant to believe that an earlier cheque from the same drawer was good.

Case 2
The complainant sold a machine to a person who contacted him by phone. The purchaser told the complainant that he had deposited the purchase price in cash into the complainant's account. The complainant checked his account using an ATM. The statement showed that a deposit had been made and was available to be drawn. The complainant, on the strength of the deposit, released the machine to the purchaser. Later the complainant was informed that the deposit was in the form of a fraudulent cheque and that the deposit had been reversed out of his account. The complainant was unable to contact the purchaser. We established that the complainant did not check with his bank to confirm whether the deposit was in cash or a cheque: he merely assumed it was cash since the money was available. The bank stated that all cheque deposits to his account had been immediately available for a number of years. The complainant should therefore have been aware of the possibility of the deposit being a cheque. The ATM slip would have indicated whether the deposit was in cash or a cheque. We assessed the bank's offer of accepting 25% liability for the loss suffered as being reasonable. The complainant accepted this assessment.

Cheques

Case 1
A trading firm received cheques on a regular basis from one of its customers and deposited the cheques to its account. Over a period of time several of the cheques had become lost in the banking system and the amounts thereof were re-debited to the company's account. The firm suspected foul play in that it suspected that there had been collusion between its customer and the customer's own bank to get rid of the cheques. The customer's bank investigated the matter and denied any such collusion. As this office does not have the powers or the resources to investigate such matters it could not either confirm or deny the bank's finding. Furthermore, it appeared that the firm had not taken sufficient steps to obtain duplicate cheques in order to minimise its losses. In all the circumstances this office decided that it could not assist the company and closed its file.

Case 2
The complainant, a close corporation, claimed the amount of a non-transferable cheque made payable to him, but which was deposited by one of its members to an attorney's trust account at the bank. The bank declined to meet the claim on the basis that there was probably a dispute between the members. We were not in possession of sufficient evidence to enable us to determine whether the close corporation had suffered a loss or not as it may have owed the amount to the member/s. However, we recommended that the bank pay a substantial amount to the complainant for the inconvenience the bank caused by not crediting the account of the payee. The complainant did not accept our recommendation and apparently intends to take legal action against the bank.

Case 3
Complainant advertised a diamond ring in the newspaper, and accepted a bank guaranteed cheque to the value of R15 000. The complainant handed over the ring without confirming the authenticity of the guarantee. After depositing the cheque the complainant was informed by the bank that the cheque had been stolen, and that the bank could not make payment thereon. Our office was unable to assist the complainant as the complainant's loss was as a direct result of the fraudulent behavior of the purchaser. The complainant should have verified the following with the bank before handing over the ring: · Was the cheque in fact guaranteed? (Fraudsters often forge bank guarantees.) · Was the cheque stolen? It would however be prudent to obtain special clearance on the cheque, and only once the bank confirms that the cheque has been paid, to hand over the goods.

Case 4
Complainant operated a supermarket. He received cheques as payment for goods. Marked "NOT TRANSFERABLE". These cheques were accepted by the bank for the credit of his account, a practice that had continued over a fairly lengthy period, which, no doubt, caused the complainant to continue accepting such cheques as payment. Later, on notification from the drawer/drawee that the cheques were stolen; the bank reversed all the disputed cheques. This however occurred, in some instances, almost a year after the cheques was deposited. The bank argued that he was not the payee and as such not entitled to the cheques and they were therefore justified in debiting/reversing the amounts. The OBS argued that, notwithstanding the fact that he was unaware that the persons presenting the cheques were not the true owners (despite providing positive proof of identification), the bank were not entitled to debit the account, even though the true owners (drawer) had a claim. The bank by accepting the cheques initially contributed to the loss; by creating the impression that all was in order, despite the restrictive crossings. Whilst it was agreed that the bank could institute a legal claim to the money, this would need to be proceeded with in accordance with the applicable legislation, as opposed to unilaterally debiting the account. It was proposed that the bank refund 50% of the total loss suffered, in addition to refunding the interest accrued since the reversal of the first cheque, this settlement being accepted by the complainant.

Case 5
The complainant issued a cheque to a contractor for work done. After issuing the cheque, the complainant realized that the work had not been done properly and stopped payment on the cheque, using Internet banking. The bank, however, did not stop payment on the cheque and the contractor received the funds. The cheque had been issued on Friday, 31 August 2001 and had been cancelled on Monday, 3 September 2001, at 14:07. The bank stated that it could not interfere with a dispute between the complainant and a contractor and therefore it did not stop payment on the cheque. After researching relevant case law and statutory law, it was established that the drawer of a cheque has the right to countermand payment on a cheque he has issued. In the circumstances of this complaint, the complainant had until the close of business on Monday, 3 September 2001 to stop payment on the cheque. The instruction to cancel the cheque was therefore given within the time allowed and the cheque should have been stopped. A ruling was made that the bank pays the complainant the value of the cheque, his wasted costs in trying to sue the contractor and an amount for distress and inconvenience. The bank complied with the ruling.

Case 6
In each of 3 complaints with similar facts, the complainants dealt with a broker to make an investment on the stock exchange. The complainants were advised to draw cheques in favour of the bank as the first step in making the investment. The broker told them an individual trading account would be opened with the bank for each investor. Cheques were drawn by each complainant and handed to the broker. The cheques were collected, contrary to the crossings and restrictive markings, for an account of a close corporation that the broker was the sole member of. The broker used the funds for his own purposes and not for the investments they were intended for. The office made a ruling that the bank had collected the cheques for someone that was not entitled thereto and that it had to refund the complainants the full face value of the cheques. As it was not possible for the bank to have collected the cheques for an account in its own name, it should either have refused to collect the cheques or have contacted the drawer thereof for instructions.

Case 7
The complainant's new chequebook was collected at the bank by a fraudster. The bank became aware of the error and issued a letter of explanation in the event that the stolen cheques were used. The perpetrator did in fact draw several cheques. The bank dishonoured the cheques. The complainant started receiving calls from the various beneficiaries of the cheques demanding payment. He had difficulty in explaining the situation each time. He also received visits from debt collecting agencies and letters of demand. When the complainant complained about the consequences of the bank's negligence in allowing the fraud to take place, the bank offered a letter of apology and an amount of R1 000. Ultimately, this office recommended that an amount of R8 000 was reasonable compensation for the distress and inconvenience the complainant suffered.

Case 8
This office posed various questions to the bank in our step 3 letter to enable us to better understand the working of the bank's cheque verification system. The bank did not respond by the due date and our office reminded the bank that should they not give us the information as requested; we would assume that the evidence is against the bank. This office proceeded to compile an initial assessment of the matter as the bank failed to respond to our second due date, finding that the evidence was against the bank. Our recommendation was that the bank should pay the complainant the amount as claimed. Both the bank and the complainant were however entitled to make further submissions after receipt of the initial assessment, and the bank was therefore afforded yet another opportunity to furnish us with the requested information. The bank however indicated that it had no further comments, upon which the initial assessment was made a final adjudication. An example of a matter where the bank's lack of co-operation led to it having to pay R10 800, where the merits of the matter appeared to be in the bank's favour.

Case 9
The complainant drew a cheque in favour of the bank's card division to pay her husband's credit card. Although the cheque was crossed and marked "not negotiable", the words "or bearer" were not deleted. The cheque was intercepted in the post and was presented at one of the bank's branches. The proceeds of the cheque were credited to three accounts unknown to the complainant. It was concluded that although there was an agreement that the complainant could send the cheque by post, it had to be drawn in a proper business fashion appropriate to the amount. This included that the cheque should not have been made payable to bearer. Although the cheque was crossed and marked "not negotiable" it still remained a bearer cheque and the thief therefore was able to present it for payment. The complainant's husband could not argue that his credit card account had been paid, due to the manner in which the cheque was drawn.

Case 10
A previous business partner that owed him money paid a cheque into the complainant's account in October 2001. The cheque was credited to his account. In March 2002 the cheque was debited to his account, as the cheque was a fraudulent government cheque. It was established that the cheque was originally lost in the clearing system. A few days after the cheque was deposited, the bank received a message from the Reserve Bank, on which the cheque was drawn, that the cheque was lost. It did not however debit the complainant's account, as it should have. It only debited the complainant's account when, in March 2002 it received another message that the cheque was fraudulent. It was concluded that the bank made a representation that the cheque had been honoured by not debiting the account in October 2001. The bank eventually agreed to restore the account to the situation it would have been had the cheque been honoured.

Case 11
The complainant claimed an amount of R40 000-00 from the bank for unauthorized cheques that had been written out by his wife, as she had no singing powers on the account. The bank indicates that the complainant's wife had a general power of attorney in respect of all of his accounts. Our office, however, warned the complainant of a possible result of a successful claim against the bank, being that the bank could possibly sue his wife for the R40 000-00 as she had the benefit of having bought goods with the cheques. Despite various requests, the complainant never advised our office whether we may proceed with the investigation into his matter. The file was therefore closed.

Closure of accounts

Case 1
The complainant, a school, had a savings account for the deposit of school fees. The bank closed the account without giving prior notification of the closure. The account was closed shortly before the school was to open for the new school year and school fees had to be paid. Due to the closure of the account, school fees could not be deposited and many parents did not enroll their children, assuming that they had to enroll them elsewhere. The complainant suffered a financial loss through the loss of fees. The complainant provided proof that the number of pupils that enrolled that year was dramatically lower than the two previous years. It could not be established that the sole reason for this decline was the closure of the account. It was, however, clear that the bank did not give notification of the closure and an award was made for the distress and inconvenience that the complainant suffered.

Case 2
The complainant, a close corporation, had difficulty in preventing its cheque account from going into overdraft. The bank warned it on several occasions that it would close its account if this behaviour persisted. However, the complainant continued to default and the bank decided to close the account immediately. This decision was conveyed to the complainant. However, the account was kept open for a while as cheques already issued were being presented for payment. These were returned 'Refer to Drawer' and the complainant's account was debited with the fees concerned. The complainant alleged that insufficient notice had been given to it by the bank of its intention to close its account and it claimed a refund of the fees. This office advised the bank that reasonable notice should be given to a customer whenever it decides to close an account, even though the customer has been warned several times. The complaint was resolved when the complainant agreed to accept an offer by the bank to refund half of the fees charged to it.

Confidentiality

Case 1
Confidential statements on the complainant's account were obtained by her estranged husband, despite her requesting the bank to refrain from disseminating such information and its undertaking not to. The complainant's husband refused to make a payment for school fees, because she had funds in her account. The complainant claimed this amount from the bank, on the basis that her husband would have paid had he not had knowledge of her bank balances. The bank refuted the claim, stating that: There was no guarantee that he would have paid in any event. · If she wanted to deceive her husband, it could not be a party to that. · He could have obtained a subpoena and had access to the records. · Since they were married in community of property, there was a single estate and he had a right to the information. We did not make an award for the amount claimed, but recommended that the bank compensate the complainant for the distress and inconvenience caused by their actions in contravention of the Code. The account was not a joint account, nor was there a power of attorney/authorisation in favour of the complainant's husband. The bank had jumped the gun in providing information before it was subpoenaed to do so.

Consumer finance

Case 1
A customer of a bank required short-term loan from his bank, but the bank refused to grant it to him. The customer alleged that on previous such occasions the bank had accommodated him and he expected the same treatment as before. The bank had, however, adopted new methods of assessing risk and it appeared that the customer no longer qualified in terms of its new criteria. The customer submitted his complaint to this office, but we decided that we could not intervene. The bank had made a commercial decision and therefore the matter was beyond our jurisdiction. The customer may or may not have merited the finance he needed, but this office considered that it had no right to look into or comment on this.

Credit bureau black listing

Case 1
Approximately three years after unsuccessfully applying for a gym membership, the complainant received a letter from the bank informing him that he owed it in respect of what it had paid to the gym. The complainant was listed at a credit bureau. Our office focused the bank's attention on the fact that the claim had prescribed and could no longer be collected. The bank conceded this, wrote off the outstanding amount and de- listed the complainant at the credit bureau.

Credit cards

Case 1
A complainant lost her credit card. The thief used the card for purchases far exceeding her card limit. Even though she was covered by lost card protection, the bank refused to compensate her for her the fraudulent purchases. The bank stated that she was negligent in not reporting her card sooner. We held the view that she was not negligent considering her past pattern of use. We further decided that she could not be held liable for those purchases, which exceeded her card limit. The bank settled the matter by compensating her for all the fraudulent purchases made.

Case 2
The complainant's credit card was stolen from him and the thief made numerous purchases with the card over the next few days before the card was retrieved. Many of the purchases were charged back by the bank to the stores concerned because the signatures on the vouchers did not match the specimen signature on the card. However, certain vouchers could not be obtained for comparison purposes. The bank refused to pay the balance of the loss on the basis that the complainant was negligent in that he lost control of his card. However, the bank finally agreed to reimburse the complainant in full when it was put to it that - · the signatures on the missing vouchers probably also did not match the specimen signature; · the card holder's credit card limit was exceeded; · the customer was not warned that purchases made with his card could cause his limit to be exceeded.

Case 3
The complainant had a credit card and was telephoned by sales persons representing her bank who tried to sell her financial products. The benefits of the products were briefly explained to her and she was told that relevant documentation would be sent to her to sign and return. The complainant's card account was debited with debit orders being the costs of the products, but she maintained that she neither received nor signed any documentation. She therefore asserted that she should be refunded and submitted her claim to us. As the bank could not produce any evidence that the complainant had accepted the bank's offers it reimbursed the complainant in full.

Case 4
The complainant, a local safari company, arranged a tour for an overseas visitor. The visitor paid for the tour with his credit card, but the local bank debited his card account twice. A refund was made, but due to a change in the exchange rate, the visitor was short paid by £75. The complainant claimed this amount on behalf of the visitor. However, the bank debited his card account with the cost of the trip a third time. When this was rectified, a further exchange loss of £72 was incurred. The bank responded quickly by refunding the amount of £147 to the overseas visitor and after negotiations it agreed to pay R500-00 to the complainant for its costs in terms of time and telephone calls and inconvenience suffered.

Case 5
This complaint relates to fraudulent transactions effected with the complainant's credit card. The bank forwarded the credit card via post to the complainant through the postal services. The complainant authorized a third party to collect the card on her behalf, and to forward it via registered post to her in New Zealand. The post office acts in their capacity as agent on behalf of the bank. Once the complainant collects the card from the post office, the risk passes to the complainant, and to this end the banks urge customers not to re-send credit cards without contacting them. The complainant had lost card protection, which protects customers against the unauthorised use of a card, from the time of the loss of the card until such loss is reported, with the exclusion of negligence on the part of the customer. The bank stated that the complainant acted negligently, constituting a breach of the conditions of use of credit cards, and is therefore not covered by Lost Card Protection. Lost Card Protection covers no PIN based transactions. None of the fraudulent transactions herein are PIN based. The card has not been retrieved. The complainant did not sign the card, as she has not received it. The criminal who obtained the card would have signed it and it would not be evident that a fraud is being perpetrated. Therefore the merchant cannot be held liable. We are of the opinion that the bank was justified in refusing the complainant Lost Card Protection on the basis of the complainant's negligence. The complainant had a credit limit of R 5000-00. The bank has granted the complainant a credit limit of R 6 300-00 for her convenience. The fact that the bank has unilaterally increased the complainant's credit limit has exposed the complainant to increased risk. The credit limit was exceeded in that the majority of fraudulent transactions were under the floor limit of the merchants and did not require the bank's authorization. The bank authorized those transactions in excess of the floor limit, as credit was available. The conditions of use of the bank's credit cards states that a customer may not obtain cash or purchase goods which will cause the credit limit to be exceeded, and further states that a customer is liable for all transactions debited to the account, irrespective of whether they were made by the customer, unless the card is reported lost or stolen. The bank stated that it does not stipulate that the credit limit may not be exceeded. The bank allows the operation of a system whereby purchases can be made irrespective of whether or not the card is overdrawn. The transaction, if under the floor limit, is authorized automatically. The complainant is not informed of this risk associated with any credit card. Any normal credit card holder will understandably be under the impression that the credit card limit cannot be exceeded. He is never given any information to the contrary. A cardholder is exposed to enormous risk without being informed of the implications. If the bank does not want to inform the client due to possible abuse, it must ensure that the system does not allow transactions exceeding the limit. If the bank cannot change their system it must either inform the client of the risk or it must accept the liability for fraudulent transactions exceeding the card limit. The complainant cannot be held responsible for the bank's lack of control over their systems. We suggested that the matter should be settled on the basis that the bank credit the complainant's account with the value of all the fraudulent transactions in excess of the credit limit of R5 000-00, including interest and charges thereon. The complainant was therefore held liable for any positive balance on her card at the time it was lost / stolen as well as the credit limit of R5 000-00. The bank was liable for the value of all the other fraudulent transactions.

Case 6
The complainant noticed a deposit on his credit card account. He enquired the source of the deposit at the bank, but did not receive an explanation. Due to the fact that he expected payment from clients he thought that the amount reflected belonged to him. The bank debited the complainant's account due to a mistake that it made in respect of the deposit - it belonged to another client. The complainant had spent the money and therefore his account was overdrawn with the debit-transaction. He requested the bank to credit his account with the amount because he thought the money belonged to him and therefore he had spent it, not hearing anything from the bank. The complainant stated that the bank admitted their mistake and therefore credited his account again. The bank acknowledged that they had made a mistake and once again debited complainant's account. As token for the inconvenience it has caused the complainant, it offered to extend his credit facility, provide him with a budget facility, voyager miles and to write of the interest and let the complainant repay the capital over a 24 or 36-month period. This office concluded that the bank's actions were justified. In doing so, it referred to the view expressed by the New Zealand Banking Ombudsman that it is "not a good idea to have an absolutely fabulous spending spree without absolute certainty about the source of the funds".

Case 7
A woman who claimed to have met her at the bank previously approached the complainant. The woman claimed to be doing a promotion for a competition at the bank's head office, and invited the complainant to participate. She offered to assist the complainant to fill out the forms and asked the complainant to write down all her details including her identity number and credit card number, which the complainant duly did. The complainant stated that she trusted that the person was indeed an employee of the bank. The lady offered the complainant a credit card holder, and in the process swapped the complainant's card with that belonging to someone else. The complainant stated that she realised what had happened within the hour and reported the incident to the bank, which stopped her card immediately. The bank however informed her that an amount of R 1 000-00 was fraudulently withdrawn from her account. The bank states that the complainant was approached by an unknown person in a shop, who requested her to write down her personal identification number (PIN), address and identity number, which the complainant supplied voluntarily. The bank repudiated the claim as they are of the view that the complainant compromised her PIN number to this unknown person in breach of the Code of Banking Practice as well as the terms and conditions of use of the card. We investigated the complaint and to this end enquired from the complainant whether she voluntarily disclosed her PIN number to the third party pretending to promote a competition. The complainant responded by stating that this third party had in fact commented on the fact that her birthday is on the 19th February. The complainant confirmed to this office that her PIN number was in fact her birth date, and commented on how clever the third party was in figuring that out. A transaction cannot be effected without the correct card and PIN number. The complainant conceded that the third party worked out what her PIN number was by referring to her birthday. In our view, the complainant's conduct constituted negligence. Although we sympathised with her loss, she was the victim of a criminal/con artist. The bank could not be held liable for her loss.

Current accounts

Case 1
The complainant was a member of a CC that exceeded the approved limit of its overdraft facility on its cheque account. The complainant, having been diagnosed with a serious illness, received payout into his personal account of dread disease cover. The payment occurred on the same day that he suffered what appeared to be a seizure and was admitted to hospital. According to the bank they then received a telephone call from the complainant, instructing them to pay off the overdraft of the CC. This was followed by a written instruction. The Bank conceded that the signature on the written instruction was not according to their specimen signature, but was satisfied by another phone call they believed to have been from the Complainant, confirming the instruction. The transfer was then made paying off the CC's overdraft. The complainant denied that he phoned the bank or issued the written instruction. He presented evidence that showed that he was in hospital at the time and not medically fit to make any rational decisions. It was found that the complainant could indeed not have been in a condition to make the calls or issue the written instruction. It was concluded that the bank did not follow proper banking practice. The signature differed from the specimen signature and the only instruction that the bank therefore had was telephonic. It was recommended that the bank refund the amount transferred out of the Complainant's account together with interest.

Distress and inconvenience

Case 1
All the complainant's problems with his accounts were resolved by the bank except for his claim for compensation, which the bank rejected. The complainant claimed an amount of R14 000-00 for his wasted time and effort in getting the matter resolved. The complainant had initially been referred from person to person within the bank without anyone properly assisting him or investigating his complaints. This situation continued for an extended period. On the facts it was clear that the complainant was subjected to substantially more inconvenience and distress than one could reasonably expect in trying to resolve a problem. It was recommended that the bank pay R1 000-00 to the complainant for substantial distress and inconvenience suffered. The bank accepted the adjudication and credited the complainant's bond account accordingly.

Fees and charges

Case 1
12 members of an organisation took out loans with the bank. The loan agreements did not clearly disclose the fact that the loans incorporated substantial charges for insurance and administrative costs. The employees were only informed of these charges after the loans had been signed. A complaint was lodged objecting to the hidden costs that were being levied. The bank initially refused to entertain the claim. Later the bank met with representatives of the organisation and an agreement in favour of the complainants was reached.

Ignoring instructions

Case 1
The complainant arranged that the bank would only pay out funds from his mother's account with him as co-signatory, to protect his mother's funds from the "black sheep" brother who was living with his mother. The bank erroneously allows the mother to withdraw all her funds with only her signature, and place them into a new account in her name. The black sheep then managed to persuade his mother to pay off his debts and lend him the main portion of her life savings. We concluded that the bank had breached its duty to ensure that funds could only be withdrawn with two signatures. However, we also found that the bank's breach did not cause the complainant or his mother any loss. The complainant and his mother remained in the exact same financial position before and after the breach by the bank. The loss was only suffered later due to the mother's own actions. The complainant, after a lengthy exchange of correspondence, accepted our Office's award for distress and inconvenience.

Instalment sale agreement

Case 1
The complainant entered into an Instalment Sale Agreement with the bank to finance a motor vehicle. Later, her broker requested her bank to get confirmation signed by the complainant. The cover confirmation sent by the broker was marked for the bank official's attention and indicated in bold letters that the insurance would not be in force unless it was signed by the complainant and faxed back to the broker. This was never conveyed to the complainant, even though she visited the bank to sign the Instalment Sale documents. She paid a deposit and the bank issued a Release Note to her. Her vehicle was subsequently written off in an accident and her insurance claim was repudiated. The issuing of a Release Note by the Bank placed the complainant under the reasonable impression that the vehicle was duly insured. The bank admitted liability, refunded the deposit and wrote off the balance outstanding.

Insurance

Case 1
The complainant's husband passed away on 15 July 2001. He had just prior to his death tried to take out a life policy. According to the complainant the bank was negligent where they were in possession of the forms to be signed by the complainant's husband in order to take out the policy, but had not contacted him to sign it. It was found that the insurance company had received the last medical report a day before the complainant's husband's death. The report was received on a Friday and the complainant's husband died on a Saturday. The bank had only received the further requirements that included a 100% loading that the complainant's husband had to consent to before the policy would be taken out. It was found that the delay in obtaining the additional medical reports could not be blamed on the bank and that the bank had indeed only received the further requirements on the Monday. It could not be said that the complainant's husband would indeed have signed the documentation and accepted the loading. The Bank was not found to be negligent.

Case 2
The complainant took out an income protector policy through a bank broker, replacing an existing policy. The new policy had lower premiums but he was informed that he had the same cover as he had on the original policy. The complainant had a psychological ailment and could no longer work. He claimed in terms of the policy. The claim was denied because the type of condition was not covered by the policy. He said that he was not made aware of this exclusion and that the broker therefore made a misrepresentation. His original policy did not have such exclusion. It was found that the claim was also denied because the condition could not be considered to be totally disabling. The exclusion was however unusual, and it was found that the broker did not point this difference out to the complainant. An amount for distress and inconvenience suffered by the complainant was recommended, but not accepted by him.

Case 3
The complainant registered her bond during May 2000, and informed the bond attorneys that she would be making use of her own insurance for the property. Upon receipt of her first statement, she noticed a deduction for insurance. With considerable difficulty, she established that the bank had instituted its own policy also. The complainant then claimed from the bank a refund of the premiums that it had deducted. We suggested that the bank refund a considerable portion of the premiums to the complainant, as timeous replies to the complainant's queries could have minimized her damages considerably.

Case 4
The complainant wanted to use her own short-term insurer when she was granted a bond. She was told that her insurer would need to be approved by the bank; otherwise she would have to use the bank's insurer. The complainant submitted the necessary information for her insurer to be approved. She then received a letter from the bank indicating that its policy was in force, but no reply about her insurer. The complainant thought this was a mistake and did not enquire further. Later she noticed premiums for the bank's insurance debited to her account. She started enquiring, but received no explanation until the complaint was lodged with this office. It was concluded that the bank's failure to inform the complainant that her application had been declined was not good banking practice. It was recommended that compensation be paid for the inconvenience she suffered and that the bank refund the premiums she had to pay to her own insurer.

Case 5
The complainant's husband took out a bond to purchase a house in 1991. Life insurance cover was taken out. The insurance premium was deducted annually from the bond and recovered along with the bond's monthly instalment. The complainant's husband died in 2001. The insurance company refused to settle the outstanding amount on the bond as it had cancelled the policy in 1992 after only having received the first instalment and no others. The bank admitted having failed to pay the premiums over to the insurance company after deducing them. The bank claimed that in term of an agreement with the insurance companies, it was their duty to request premiums from the bank. We advised the bank that our pre-investigation view was that it was liable. The bank responded by agreeing to settle the claim in full

Case 6
A mediation that highlights the benefits of the process involved a long-term insurance company, a bank and a complainant. The insurance company is not subject to the OBS's jurisdiction, so its participation was on a voluntary, contractual basis. The complainant had sold goods to a fraudster who had managed to have the proceeds of an irregularly surrendered policy transferred into a bank account opened specifically to receive the funds. The fraudster then transferred these funds to the complainant's account held at the same bank. When the insurance company became aware of the fraud, they contacted the bank requesting that the funds be frozen. The funds were indeed frozen in the hands of the complainant's account, resulting in a cheque that he had drawn in favour of his supplier being returned unpaid. Each party believed they were not responsible for the losses and each party was initially not prepared to incur any liability, the insurance company expecting to have the funds returned, the bank happy to comply with a binding instruction in regard to whom they should give the funds to and the complainant insisting the bank unfreeze the account and pay damages and interest. The matter was settled amongst the parties on the basis that the bank refunds the insurance company a portion of the funds and also unfreezes the full amount of the funds available in the complainant's account. The result in the end was that each party, to varying degrees, compromised on their original position.

Interest payable on student loan

Case 1
The complainant took out a student loan from the bank and, whilst she did repay the interest during her first year of study, it was agreed that she would be able to begin repayment of both the remaining interest and capital upon completion of her degree. The complainant made numerous monthly repayments once she graduated and in fact these payments totalled more than double the amount of capital she borrowed from the bank. According to the bank statements, the complainant still owed the bank a considerable amount of money, which led the complainant to seek the assistance of the office, claiming that the in duplum rule applied to her and that, accordingly, she was only liable for up to double the capital originally borrowed from the bank. The office conducted fairly extensive research into the history and nature of the in duplum rule that dates back to Roman Law times, and determined that it applies only to still unpaid interest and not to interest already paid. It was ruled that the bank was entitled to apportion the complainant's payments first to interest and then to capital. By doing so, the amount claimed by the bank was legitimate, despite the fact that it would mean that the complainant had repaid more than double what she borrowed from the bank originally since the interest that was in question was paid interest and therefore the in duplum rule did not apply to it. It must be mentioned that despite the ruling in its favour, the bank in question reached an amicable settlement with the complainant and wrote off a substantial amount of the outstanding debt.

Investments

Case 1
The Complainant made an investment through a broker of the bank. He wanted his capital to be guaranteed and wanted to receive a monthly income. He later realised that the product he obtained is not what he agreed to. He queried this and also instructed that his monthly income be reduced in order to ensure that the capital grows to his original investment. When he gave this instruction the investment was passed on to an independent broker. The complainant said that he never gave this instruction. The bank initially denied liability on the grounds that the broker, that handled the matter, does not belong to the bank. It was pointed out to the bank that the complaint was precisely that the fact that the matter landed up with the independent broker was contrary to the complainant's instructions. The bank revisited the matter and decided to pay the complainant and amount of R385 000.00.

Case 2
The complainant invested R400 000,00 in Unit trusts on the advice of the bank's financial consultant. She submits that as the consultant did not advise her of any alternatives, she assumed that there were no other products appropriate to her requirements. The consultant failed to explain to the complainant that Unit trusts were linked to the stock market: she discovered this 6 months later. She however, left her funds in the said investment. Three years later, the total investment has dwindled to approximately half its original value. Her complaint is that she tried on several occasions during that time to contact the consultant for his advises regarding the steady decline in her investment value and he either did not return her calls or he failed to revert with the promised action plan. We found that the consultant was negligent in that he failed to inform and advise the complainant of her options properly after the stock market crash, and also that the complainant had failed to adequately mitigate her losses. We recommended that the consultant return half his initial fee to the complainant.

Case 3
In another matter the complainant's instructions regarding an investment were that the capital invested be guaranteed, and that he required the maximum monthly income from the investment during the period of the investment. The complainant further indicates that he was not aware that his money would be placed in unit trusts and subject to market volatility. The complainant had lost approximately R17 000 from his initial investment and expected the bank to reimburse him with that amount. The policy documentation clearly indicates that the product was linked to unit trusts and subject to market volatility. The guaranteed maturity value was clearly indicated as an amount lower than the capital amount invested. The bank, in an attempt to settle the matter, offered an amount of R10 000 as an ex gratia payment, which the complainant rejected. The documentation does not appear to be ambiguous, and there is a dispute of fact between the bank's version of what took place on the day the investment was made, and that of the complainant. We wrote to the complainant urging him to reconsider the bank's offer, as, in the circumstances, it appeared to be very reasonable.

Case 4
Complainant sought investment advice from his bank's financial consultant as he had R269 000,00 to invest. He had an idea of buying a second home, as his home was bond free. The consultant advised him to rather apply for a bond on the house that he was occupying and to invest the amount of R150 000 in unit trusts. On expressing his concern about the repayments on the bond, the complainant was advised by the consultant that he would get R1 500-00 from the investment and that this would service the bond. The complainant was a pensioner who was not made aware of the risks involved. We held that the consultant failed to provide the complainant with sound advice and also failed to recommend alternatives once the capital had decreased drastically. A fact that could not be ignored is that, what appeared to have been an unencumbered asset was as a result of having followed the consultant's advise, now burdened with a mortgage bond. We thus held that the consultant had misrepresented the dynamics of the investment to the complainant and that this had ultimately misled him. We suggested a settlement of R20 000,00, which the parties accepted.

Case 5
The complainant and her former husband (Mr A) opened fixed deposits in the names of their three minor children. The complainant and Mr A signed the application forms to open the accounts. On maturity the proceeds were paid out to Mr A on his instruction only. According to the bank he was the only signatory to the account. Mr A did not give the money to the complainant or the children and he did not apply the money for the benefit of the children. The documentation submitted to us office showed that the complainant's signature had been obliterated on all the applications. It could not be established who made the alterations or when they were made. It was however concluded that it was not good banking practice for the bank to open or maintain the accounts with the alterations on the forms. The suggestion that the bank make an ex gratia payment was accepted by both the bank and the complainant accepted.

Mandate

Case 1
The complainant was the sole member of a close corporation (CC). She complained that several amounts were transferred from her personal account to her CC account without her authority. The transfers were authorised by her bookkeeper, by telephone. The complainant denied having given the bookkeeper authority to transfer funds from her personal account. The bookkeeper was involved in defrauding the CC. The CC was eventually forced into liquidation. The bank contended that the complainant had given the consent verbally at a meeting. In any event, the complainant would be unjustly enriched if she were reimbursed, as she and the CC was the same person. It was held that the bank had failed to produce credible evidence that the bookkeeper was properly mandated to transfer funds from the complainant's personal account. It would be contrary to good banking practice, let alone sound business practice, in the age of fax machines and e-mails, for a verbal, open mandate to have been obtained in the manner suggested by the bank. In terms of the Close Corporations Act, a close corporation is a separate juristic entity from its member(s) and has limited liability. Accordingly, the bank's argument in this regard failed. The bank was ordered to reimburse the complainant the full amount that had been transferred from her account.

Mortgage finance/home loans

Case 1
The complainants wanted to obtain a further bond for R70 000.00 on their property to finance a business deal and received confirmation that this amount was granted. When the attorneys phoned them to sign the documents they were however informed that the bond was only in the amount of R12 000.00. As the complainants had already committed themselves financially they had to sell their house to cover their commitments. After lodging a complaint they were informed that a mistake had been made and that they did indeed qualify for a bond of R70 000.00. The bank paid an amount for distress and inconvenience and for occupational rental that the complainants had to pay on a new property.

Case 2
The complainant qualified for a bond, and alleged that the bank's attorneys informed her that she might organise her own homeowners' assurance. The complainant noticed a deduction for insurance from her first bond statement, and for a period of nine months battled to obtain details from the bank. The bank after nine months confirmed that the deduction is for homeowners insurance, and that the complainant was obliged to make use of the bank's insurers in terms of her loan agreement. Our office took note of the fact that the bank's insurers had to be used in terms of the loan agreement. The complainant however paid double insurance due to the bank not informing her, of the nature of the deduction. The bank accepted a recommendation in which the bank had to reimburse the complainant with a percentage of the double premiums that complainant had to pay.

Case 3
The complainant's instalments on her bond account were paid directly by her employer. Her employer would send cheques as payment for all its employees' instalments. According to the complainant, the bank would in some instances only credit her account some days after the cheque had been received. Consequently she suffered damages as she was paying interest on a higher balance. It was found that in some instances there was indeed such a delay. After enquiring with other banks as to the industry practice it was concluded that the bank should have regarded the day that the cheque was banked as the effective date of payment. The instalments should in all instances have been credited to the complainant's account on the same day as the cheque from her employer was banked. A precise quantification of the complainant's loss could not be made and it was recommended that bank pay an amount of R1 000-00. The complainant however refused to accept this.

Case 4
The complainants had two bonds over their property. They claimed a refund in interest from bank because a fixed interest rate and not a variable rate should have been applicable to both bonds. The documentation for the first bond showed that a variable interest rate was applicable. There were, however, contradictory terms regarding the interest rate in the second bond contract. One clause indicated a fixed rate, while another clause mentioned a variable rate. The complainants had however been charged interest at a variable rate for about seven years before they complained. The bank indicated that it was entitled to rectification of the contract, as the written document did not reflect the true intention of the parties. It was concluded that bank was indeed entitled to rectification. The fact that a variable rate had been applied to the bond for around seven years showed that the true intention of the parties was that a variable rate should apply.

Case 5
The complainant was being held liable for a substantial outstanding amount on his bond account. An Initial Assessment found that, in contravention of the in duplum rule, the amount that the bank was claiming was indeed more than what it was entitled to claim and suggested that the bank write off a substantial amount on the account. The bank eventually wrote off the whole amount that the complainant still owed on the bond.

Over-the-counter-withdrawals

Case 1
The complainant alleges that she did not make an over the counter withdrawal, and claims the amount of R2 000 from the bank. The bank furnishes us with a statement from the teller that indicates that she obtained the person making the withdrawals ID. She confirmed that the picture on the ID matched with the person making the withdrawal, and that the ID number corresponded with the ID number on the bank's system. The statement of the teller was corroborated by details captured on the deposit slip. Our office was satisfied that the bank had taken the necessary steps to identify the person making the withdrawal before making payment.

Payment systems

Case 1
The complainant purchased a motor vehicle on hire purchase and immediately authorised a debit order to service the insurance on the vehicle. Due to an administrative error the monthly premiums were never debited to his account, resulting in no insurance cover coming into effect. When the complainant's son was involved in an accident the claim was repudiated on the basis that the vehicle was not covered. The bank approached the insurance company to accept late payment and entertain the claim. The insurance company submitted that even if the complainant were covered, they would still have repudiated the claim on the basis of non-disclosure of the fact that his son was a regular driver of the vehicle. We pointed out that as the bank's error resulted in no policy coming into existence, nothing was forwarded to the complainant. Accordingly, he was denied the opportunity to disclose that fact to the insurance company. The bank accepted liability.

Case 2
The complainant submitted that a deposit to the bank for rentals was incorrectly recorded by the bank. He contended that he deposited R1454-20 and that the bank teller only processed an amount of R54-20. He maintained that his deposit slip reflected the correct amount. The bank's records reflected an amount of R54-20 as having been deposited. We called for the original documents in order to facilitate a decision in the matter. On the face of it, it appeared that the complainant's deposit slip was not tampered with, as it appeared that it was the same handwriting and that the same pen was used to fill in the amount. Nevertheless, in order to be certain of our recommendation, if any, we procured the services of a forensic expert. His report revealed that the complainant's original documents were in fact tampered with. The tampering was detected by the delay in the insertion of the numbers 1 and 4 after the R denoting the Rand and before the 5. We therefore closed our file due to a lack of merit to the complaint. This matter is a prime example of how unscrupulous behaviour on the part of the complainant not only wastes the time and resources of this Office but also prejudices the chances of other legitimate complainants being dealt with faster.

Petrol card/garage cards

Case 1
The complainant had been issued with a petrol card, but when he resigned from the firm where he was using it for petrol purchases, he left the card with the firm for it to pay off the amount he still owed on it. However, the card was used to pay for further purchases and the complainant maintained that he was not liable for them. However, bank statements were sent to him showing these purchases, but he did not object to them at the time. In our view, by doing so, he condoned the actions of the purchasers. Furthermore, he contravened the bank's terms and conditions by losing control of the card. In order to recover part of the debt the bank exercised its right of set-off to which the complainant also objected. We advised the complainant that we could not see any reasonable prospects for an adjudication in his favour and closed our file.

Case 2
The complainant had his garage card stolen. He had not used the card for a long time so he did not realise it was stolen. He was then informed that R19 000.00 had been spent on the card. The account had been dormant for a long time. The account did not have any overdraft facilities. He accuses the bank of having been negligent in not alerting him to the activity on the card. A meeting was arranged between the bank and comp. A settlement was reached: the complainant accepts liability for the credit balance of R10 000 that was on the account and for a shadow credit limit of R2000.00 (of which he was aware based on his knowledge of how it worked on his other accounts). The bank then accepts liability for all the transactions that took place beyond the shadow limit (about R8000).

Property in possession

Case 1
The complainant bought a property from the bank's Property in Possession (PIP) department. A year and a half after the property was registered in his name; the complainant had not been able to occupy the property, as an illegal tenant refused to vacate it. The bank had not even handed the complainant a key to the property, despite the fact that the complainant was making regular monthly payments towards his bond. The complainant requested the reversal of the transaction, as the town council was now threatening to sue him for arrears. The bank offered to take steps to assist the complainant in having the tenant evicted, although its contract did not guarantee vacant possession. Our Initial Assessment suggested that the transaction be cancelled and the complainant be put into the position had the contract not been signed. Following discussions, the bank undertook, in future, to assist clients in obtaining vacant possession of properties sold. In the event of the eviction not be finalized within the timeframe stipulated, consideration would be given to cancellation of the contract. The bank further agreed to add a new addendum to its standard form contract, specifically making clients aware of the risks involved in purchasing a PIP.

Property

Case 1
The complainant bought one of two units in a sectional title complex. The transfer for both units was done on the same date. When the complainant wanted to sell his unit, he found out that his unit was on the name of the owner of the other unit and vice versa. He felt that the bank should have seen to it that the right property was bonded. The office could not impute any liability to the bank, as there were other parties involved in the transfer. The bank however, without accepting liability, offered to pay for the rectification transfer in order to place the complainant in the position to transfer the correct property.

Case 2
The complainant bought a property owned by the bank and also obtained her financing through the bank. The description that the bank gave the complainant showed that the property was a two-bedroom place. The complainant went to view the property several times, but could not gain entry. Everything was however ready for the transfer and the complainant allowed the transfer to go through, still not having viewed the property. Even while the transfer process was going on, she still attempted several times to gain access to the property without success. After the transfer went through, the complainant found that the property was a one-bedroom unit and not a two-bedroom and found that someone was already in the property claiming to have a rental contract with the bank. The bank paid the costs to evict the occupiers of the property and also re-valued the property and found that the complainant paid R45 000.00 too much for the property.

Robbery

Case 1
The complainant drew money from a bank branch. He was robbed of his money when he arrived at his office. He suspected bank staff was involved in the robbery in that they could inform robbers that he had withdrawn money and what his address was. The bank investigated the incident and found no staff involvement. It was found that our office was not equipped to deal with this form of complaint. The level of investigation required made it more appropriate for the police to investigate.

Savings account

Case 1
The complainant opened a savings account, ostensibly for use by his son. As this was a "junior" savings account, no service fees were charged. The bank became suspicious when large amounts were deposited and withdrawn. It changed the portfolio to a normal savings account and levied fees and charges for the past transactions. The bank did not inform the complainant timeously and therefore refunded him 50% of the amount that was debited against the account. The complainant claimed the rest of the money. The bank has refunded the complainant 100% of the fees and charges debited (the remaining 50%). The bank must inform its clients timeously of any action they intend to take on an account. It may also not act punitively without following legal channels.

Securities

Case 1
The complainant applied for a personal loan with the bank and presented an endowment policy as security. The loan was to be repaid on or before 1 October 1999. The bank wrongly surrendered the policy on 13 July 1999. During the course of the investigation, it was discovered that the Bank had acknowledged its fault in writing to the insurance company involved on 18 October 1999. This was brought to its attention and the matter was finally settled some 2 years after being accepted as a legitimate complaint. The matter could have been resolved a year earlier had the bank co-operated with the investigation and disclosed the relevant information.

Case 2
The complainant was a member of a CC that exceeded the approved limit of its overdraft facility. The complainant, having been diagnosed with a serious illness, received payout into his personal account of dread disease cover. The payment occurred on the same day that he suffered what appeared to be a seizure and was admitted to hospital. According to the bank, it then received a telephone call from the complainant, instructing it to pay off the overdraft of the CC. This was followed by a written instruction. The bank conceded that the signature on the written instruction was not according to their specimen signature, but was satisfied by another phone call they believed to have been from the complainant, confirming the instruction. The transfer was then made, paying off the CC's overdraft. The complainant denied that he phoned the bank or issued the written instruction. He presented evidence that showed that he was in hospital at the time and not medically fit to make any rational decisions. It was found that the complainant could not have been in a condition to make the calls or issue the written instruction. It was concluded that the bank did not follow proper banking practice. The signature differed from the specimen signature and the only instruction that the bank therefore had was telephonic. The bank refunded the amount transferred out of the complainant's account, plus interest.

Case 3
After having sold his share of a close corporation (CC) the complainant discovered that the bank had cashed in certain policies held by it as security and used the proceeds to cover the debts of the CC. The complainant claimed compensation based on the amounts assured and the projected value of the investments involved. The bank conceded that the complainant had been discharged as a surety for the CC and that the policies belonged to the complainant. The bank argued that, as it held the policies as security for the complainant's personal account that was in arrears, it was entitled to realise them anyway. The office established that the legal position is that, where a policy is pledged, due diligence must be exercised in the custody of it. It may not be transferred until the debt falls due, which happens when formal demand for repayment is made. The office held that the bank wrongly applied the proceeds of the policies to the reduction of the debts of the CC. The bank was ordered to arrange the reinstatement or replacement of the policies, subject to the complainant providing certain guarantees in respect of his indebtedness to the bank. Unfortunately, the complainant had failed to disclose that he had had a heart attack since the policies were cashed in, making it difficult to comply with the ruling. The matter was eventually settled on the basis that the bank paid the complainant a lump sum.

Case 4
The complainant was advised by a broker to surrender policies he had that were ceded to the bank as security, and to invest in unit trusts and take out a new policy to cede to the bank. The complainant decided against the broker's advice. He later found out that, without his knowledge or consent, the cession was cancelled and that the policies had been ceded to someone else. The complainant disputed that he had authorized the cession and claimed that the bank had handed the broker the policies without his authority, allowing the broker to commit the fraud. It was concluded that the bank was negligent in canceling the cessions and handing the policies to the broker. It was recommended that bank assist the complainant to have the fraudulent cession cancelled. If this were not possible, it was recommended that the bank replace the policies. An amount for the distress and inconvenience the complainant suffered was recommended as well.

Case 5
The complainant ceded unit trusts to the bank as security. She held the bank responsible for the management of them during the period they were ceded to the bank. This Office was of the view that the management of an investment remains the responsibility of the "owner" of the investment and therefore dismissed the complaint.

Suretyship

Case 1
Complainant signed an unlimited surety for her son in 1992. The son paid the debt in full. The bank sent a letter to the complainant releasing the fixed deposit, which had been held in surety. In 1998 the son again incurred debt on another loan with the same bank but failed to pay it all. The complainant and her son were never informed that the original surety signed in 1992 was still applicable and enforceable. The bank could not recover the debt from the son so the bank sued complainant based on surety for the original debt in 1992. We recommended that the bank withdraw their action against the complainant based on the fact that the original surety had possibly been cancelled. The bank resolved the matter by withdrawing the action against the complainant.

Case 2
The complainant's divorce order compelled her to have her ex husband released as surety over their mortgage bond on or before the end of July 2000, failing which she would have to pay him R190 000. She lodged her application to release him 17 days before the due date. She complained that the consultant represented to her that it would take 4 days to process and that she relied upon that representation. The application in fact took 15 working days to approve resulting in her being liable for the R190 000 payment to her ex husband. We ruled that the bank was not a party to the settlement agreement and could therefore not be held responsible for ensuring the complainant's timeous compliance therewith. The bank was further not informed of the urgency of the matter. The complaint was not upheld.

Unauthorised transfers

Case 1
This office sifted through voluminous correspondence from the complainant and the bank attempting to ascertain why an amount was transferred from the complainant's one account to another with apparently no reason. Neither the bank nor the complainant was able to enlighten us during our investigation, and we therefore proceeded to compile an assessment, concluding that the transfer was effected without an instruction. The bank's response to the assessment included an application for rescission of judgment that had been launched by the complainant. This application rather succinctly set out that the transfer had been in terms of a debit order signed by the complainant, which they requested the bank to reverse as they had made direct cash payments. The complainant was therefore at all times aware of the reason for the transfer, but omitted, even after the initial assessment, to inform this office of the exact facts of the matter. The file was closed based on the complainant attempting to mislead this office.

Vehicle finance

Case 1
The complaint involved the bank having a vehicle "written off or scrapped" in error. The complainant was the seller of the vehicle and the bank customer was the would-be purchaser of the vehicle. The bank, in its application to deregister the vehicle mistakenly applied for the vehicle to be scrapped. The complainant claimed for the damages occasioned by the subsequent cancellation of the sale agreement and distress and inconvenience. We identified our lack of jurisdiction to investigate the matter in step 3 of our process, as there was no bank/customer relationship between the complainant and the bank. The bank was however, prepared to make an offer of settlement to the complainant after we had brought it to their attention firstly, that we lacked the necessary jurisdiction to intervene and secondly that it appeared on the face of it that they had made a fatal error that had in fact contributed to some, if not all of the complainant's loss. The bank thus made an offer for distress and inconvenience. It was interesting and indeed encouraging to note that the bank in this instance was prepared to negotiate a settlement with this office even though we it was outside of our jurisdiction. The complainant was however not satisfied with the offer and preferred to pursue the matter in court. He was nevertheless very happy with the service provided by this office and understood and appreciated our limitations.

Wrong account number

Case 1
The complainant made a deposit of funds intended for his account. The funds were incorrectly deposited into an account with a number that differed by one digit from the complainant's account number. The complainant noticed the error and immediately approached the bank. The complainant argued that the bank was grossly negligent in not verifying the account name and number, even more so in light of the fact that a bank employee wrote the account number on a card for the complainant when the account was opened. The bank countered that it is the responsibility of the person making the deposit to complete the deposit slip and to ensure that all the information reflected on the deposit slip is correct. The bank further relied on the disclaimer clause printed on the deposit slip. The bank indicates that the incorrect account, into which complainants' deposits were made, has been closed, and the bank advised complainant that his right of recourse lies with the person who has been unjustly enriched. We investigated the matter and concluded that it was clear that the teller was in direct breach of the provisions of the Teller Procedure Manual, which clearly requires the teller to verify the cash, account number and client's name, to the deposit slip. We suggested that the bank bore 100% of the complainant's loss. Further, the bank was urged to pay an amount in respect of distress and inconvenience, particularly as this matter could easily and speedily have been resolved by the bank, without this office becoming involved.