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Banking Ombud reports increase in complexity of complaints – 2019 Annual Report

The Ombudsman for Banking Services (OBS) published its annual report, showing an increase in calls received, but a decrease in actual complaints registered.

Although the statistics for 2019 demonstrate a decrease in complaints, the increased complexity of some of these complaints meant that they took much longer to resolve, the OBS Chairman, Advocate John Myburgh, explained. “Not surprisingly, one of the constant challenges that consumers faced in 2019 was the occurrence of fraud in the internet banking and credit card spaces.” The report shows that internet banking fraud matters have been the top category of complaints for the fourth consecutive year.

Reana Steyn, CEO and Ombudsman for Banking Services confirmed that the top three categories of complaints each involved an element of fraud and theft committed by cyber-fraudsters. According to Steyn complaints relating to service/conduct and maladministration are still in the minority, although they definitely give cause for concern in certain instances. “The issue of over-indebtedness and consequent lack of ability to pay back credit agreements, has not yet given rise to significant numbers of complaints. With the anticipated financial downturn, we expect to see an increase in these types of matter,” she stressed.

A breakdown of some of the category statistics

Although there was a slight decrease, internet banking cases was still the top category with the most complaints (18%).
Credit card fraud matters increased by 3% and current account complaints increased by 2% as a percentage of the total claims.
Interestingly, insurance complaints decreased from 1% to 0%.

Treating customers fairly

The report also highlights compliance to the six TCF outcomes. It is commendable to note that where advice was given, it was suitable and the customer’s circumstances were taken into account, as this outcome had the lowest instance of complaints. The provision of clear information fell short though.

Understanding the terms and conditions

Various case studies highlighted principles that clients should be alerted to. One of these is the importance of familiarising them with the terms and conditions of their contractual relationship with their banks. In one specific case, the complainant’s monthly instalment in respect of her insurance policy was deducted from her bank account by way of debit order. Her debit order was returned unpaid for two consecutive months which resulted in the policy lapsing. A month after the two returned debit orders, the complainant was in a car accident. She lodged a claim with the insurance company which was repudiated. The complainant lodged a complaint with the OBS and alleged that her claim was repudiated because of the Bank’s negligence in administering her account.

The bank responded and pointed out that the terms and conditions of the account stipulated that there should always be a minimum balance in the complainant’s account. On various occasions they also alerted the complainant of the returned debit order. As a result the complainant was fully aware that her premiums were not being met. Her failure to attend to these payments constituted a breach of the agreement between her and the insurance company. Therefore, the Ombud found that there was no basis to hold the bank liable for the complainant’s claim being denied.

Will the 2020 report show a different picture? As Steyn pointed out correctly, the issue of over-indebtedness and lack of ability to pay back credit agreements will rise as a result of the financial turndown – a financial turndown that will be further impacted by the economic impact of the COVID-19 pandemic.

Click here to download the report that includes interesting case summaries.

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