The role of the Banking Ombudsman’s office is more relevant now than it has ever been
The impact of COVID-19, and the financial crisis that is bound to follow in its wake, will have a lasting impact on society and business as a whole. It will be a time of great financial stress and a time where the services of bodies such as the Ombudsman for Banking Services (OBS) will be needed now more than ever.
The impact and complaints of COVID-19 related bank issues will only be felt in the months to come after the dust has settled and we will only be able to report on the effect of the crises on consumer complaints in the next reporting period , the Banking Ombudsman Reana Steyn advised.
The annual release of its results and financial statements marks an important event on the OBS calendar, and this year is no different, despite the challenging circumstances. The OBS has for the first time released its Annual Report via the digital platform. The report shows that during 2019 the OBS opened a total of 6 472 formal cases and closed 6 333 of the cases opened. In 2018, the OBS opened 7 115 formal cases and closed 7 307 formal cases. This means that the OBS opened and closed slightly fewer complaints at 9% fewer complaints opened and 13% fewer complaints closed in 2019 than in 2018.
Two thousand and nineteen saw the number of walk-in complainants increase from 242 in 2017 and 113 in 2018 to a record 326. This may be an indication that more people are becoming aware of our expert free service and feel comfortable coming to personally discuss their banking issues, Reana Steyn explained.
There was a significant decrease in the number of referrals recorded in 2019. In 2019 the OBS referred 4 709 complaints to banks compared to the 6 309 case referrals in 2018 and 7 173 referrals in 2017. “This could indicate that more banking clients understand that they have to first report any dispute or complaint to their bank to try and resolve same, before they approach our office for assistance”, Steyn said.
Types of complaints
Internet banking complaints accounted for 18% of total complaints received in 2019 – 4% less than the previous year. The office closed 1 292 internet banking fraud cases for the year 2019. About 947 (73%) of these complaints were resolved in favour of the banks and 345 (23%) were in favour of the bank customers. Like in previous years, these complaints related to fraud in the electronic banking space. “Vishing, phishing and smishing, fraudulent sim swaps are still just as prevalent and some unsuspecting banking clients are still conned into unwittingly providing fraudsters with their personal banking details”, Ms Steyn advised. “There is a need for continued consumer education and awareness when it comes to this type of fraud or any other fraud and the OBS is committed to assist the banking community in providing such education and awareness Ms Steyn added.
Credit card complaints remained second on the list with an increase to 15% (12% in 2018) of the total complaints received in 2019. A total of 904 credit card related complaints were closed by the OBS. A total of 214 (24%) of these cases were resolved in favour of the bank customers while 690 (76%) were in favour of the banks. The two issues most prevalent in this space were complaints related to card fraud and chargeback disputes due to online trading.
ATM complaints accounted for 821 (13%) cases opened in 2019, which is down by 1% from 2018 (14%). With these complaints the issues also centre around fraud. As with the other fraud related complaints mentioned above, 84% of the cases (694) were resolved in favour of the banks while 16% of cases (127) were resolved in favour of the bank customers. The type of investigation involved with these types of matters requires the OBS adjudicators to satisfied themselves that the bank customer compromised their card and PIN through no fault of the bank, Ms Steyn explained.
Current account complaints accounted for 649 (12%) of the complaints received in 2019 (10% in 2018). A total of 445 (65%) of these complaints were upheld in favour of the bank while 244 of the complaints were found in favour of the bank customers.
Personal loan complaints accounted for 666 complaints (11% in both 2019 and 2018), mortgage loan finance for 490 (8%) (10% in 2018), vehicle finance accounted for 462 (8%) of complaints (8% in 2018).
Debit orders accounted for 190 (3%) (the same percentage as in 2018) of cases received. There was an almost 50% split with about 48% of the debit order complaints found in favour of bank customers, according to Steyn.
As with the previous year, the bulk of the complaints opened by the OBS are from Gauteng at 44% (42% in 2018), followed by Western Cape, 15% (same as in 2018), and Kwa–Zulu Natal 13% (same as in 2018).
What is interesting to note is that, of the top 3 complaints per age group received by the OBS in 2019, most complaints from people under the age of 31 related to ATM fraud, Internet banking fraud and to Car finance related issues. Most complaints received from those above the age of 31 but below the age of 40 related to Personal loans, Internet banking and ATM fraud (in that order).
Although there is a slight drop from 2018 the OBS still recorded an alarming statistic of about 64.58% of the complainants being from people over the age of 40. Internet banking fraud comprised most of their complaints followed by credit card and ATM fraud complaints. “This is an indication that still more measures must be taken to educate this group about the do’s and don’ts when it comes to banking, said Ms Steyn.
Performances by bank
According to the stats, the following number of formal cases were opened against the 5 big banks in 2019:
- First National Bank saw 1 707 complaints opened against it (1 560 in 2018).
- Absa bank saw 1 483 cases opened against it (1 776 in 2018),
- Standard bank saw 1 127 cases opened against it (1 203 in 2018),
- Nedbank saw 1 094 cases opened against it (1 265 in 2018), and lastly,
- Capitec bank saw 763 cases opened against it (1 001 in 2018).
"What is important to note is that the number of files opened in 2019 per bank is not necessarily indicative of the individual bank’s performance or the way in which they treat customers and complaints. Banks vary considerably in size, client profile and product mix and these factors all impact the number of complaints made against a bank. Most banks saw a decline in the number of cases opened at the OBS and we believe this is due mostly because of the efficient way in which matters were handled at the referral stage, thereby negating the necessity to open a formal case," said Steyn.
Steyn added that under the current economic conditions that the country finds itself in, there most probably will be an increase in the number of complaints and the role of the Ombudsman’s office will be more relevant than it has ever been in the past. In this regard, Ms Steyn reminded bank customers of the free, easily accessible alternative dispute resolution service offered by her office to all bank customers who have complaints that are not satisfactorily resolved by their banks, to lodge a complaint with her office.