A bank can be legally right and still find itself on the wrong side of the ombud.
That was one of the key lessons emerging from six banking case studies featured in the National Financial Ombud Scheme’s 2025 annual report, which released last week.
The disputes – ranging from a cancelled vehicle sale and a repossession gone wrong to an investment scam and a mortgage-rate disagreement – provide a practical guide to how the ombud approaches complaints involving banks.
Viewed together, the six cases show that disputes are often less about whether money is owed and more about disclosure, due process, fairness, and whether both sides understand the agreements they have entered.
When fairness matters as much as the law
A dispute between a vehicle purchaser and Standard Bank provided one of the clearest illustrations of the NFO’s approach to fairness and good banking practice.
The complainant financed a vehicle through the bank for R511 660. Shortly after taking delivery, the vehicle began experiencing persistent mechanical problems. Despite repeated repair attempts, the faults could not be resolved.
The customer and the dealership eventually agreed to cancel the sale, and the vehicle was returned. The problem was that the dealership failed to refund the purchase price, leaving the customer without the vehicle but still liable for the finance agreement.
The dispute eventually landed before the Motor Industry Ombudsman of South Africa (MIOSA), which confirmed the cancellation and ordered the dealership to refund the purchase price, less a deduction for the customer’s use of the vehicle.
Following the ruling, the dealership requested a settlement figure from Standard Bank and paid R470 070.04 into the vehicle finance account. The bank treated the payment as settlement of the debt and closed the account.
Before the payment was made, however, the complainant informed the bank about the MIOSA ruling and objected to the proposed settlement. Her concern was that the dealership appeared to be paying only the outstanding finance balance rather than fully implementing the MIOSA order, which required a refund of the purchase price less fair usage costs.
The bank provided a settlement figure to the dealership, accepted the payment, and closed the account. It took the view that any dispute regarding the refund remained a matter between the complainant and the dealership.
From a legal perspective, the bank was entitled to do so. The NFO noted that South African law permits a third party to settle a debt on a debtor’s behalf, even without the debtor’s consent, provided the payment is made for the debtor’s benefit. The dealership’s payment validly extinguished the debt owed to the bank.
The Code of Banking Practice requires banks to treat customers fairly and place their interests at the centre of their dealings. The NFO found that once the bank became aware of the MIOSA ruling and the complainant’s concerns, it should have taken a more active role in ensuring the ruling was properly implemented.
Other banks consulted by the NFO indicated that they would not have closed the account under similar circumstances. Instead, they would have engaged with the dealership, sought clarity on the refund calculations, and ensured that the customer received accurate information regarding any remaining liability.
According to the ombud, Standard Bank prioritised its relationship with the dealership over its duty of care to the complainant. Although any claim for the balance of the refund remained a matter between the complainant and the dealership, the bank had failed to act consistently with the principles of fairness contained in the Code of Banking Practice.
The complainant’s dispute with the dealership was later resolved through the National Consumer Commission. The NFO ordered the bank to pay R5 000 for distress and inconvenience caused by its handling of the matter.
The case highlights an important point: banking complaints are not always about whether a bank acted within its strict legal rights. The broader question is often whether the bank acted fairly and reasonably once it became aware of circumstances affecting its customer. In this instance, the NFO found that a bank’s duty to treat customers fairly extended beyond its narrow legal interest in the transaction.
Banks must follow the rules
Two of the case studies involved banks that were entitled to enforce their rights but failed to follow the proper procedures when doing so.
One involved a vehicle that was repossessed while it was being driven by the complainant’s employee.
The customer maintained that she had never voluntarily surrendered the vehicle and said the bank had repossessed it without a court order, without a sheriff, and without any signed surrender documentation.
The bank argued that the vehicle had been handed over voluntarily.
The NFO’s investigation found otherwise.
The bank was unable to produce a signed voluntary surrender form or evidence of a court order authorising the repossession, yet the vehicle had already been sold for R419 750.
There was another side to the story.
The account was substantially in arrears, and only two partial payments had been made since the agreement began.
The NFO accepted that the bank was entitled to enforce the agreement because the customer had defaulted. What it was not entitled to do was bypass the legal process.
The vehicle sale left a shortfall of R387 712.15, which the bank was still attempting to recover. The NFO recommended that the bank write off the entire amount because it had failed to follow the correct legal process. The bank accepted the recommendation.
The NFO also noted that the complainant had enjoyed use of the vehicle for several months despite making only limited repayments. Taking those facts into account, it considered the write-off of the shortfall to be a fair and reasonable resolution of the dispute.
A similar issue arose in a separate home-loan dispute.
The complainant noticed that her account had been debited roughly two weeks before the scheduled instalment date. The full instalment was then deducted again on the agreed date.
The bank argued it was entitled to do so because the account was in arrears.
Although the bank relied on a clause permitting the re-presentation of failed debit orders, the NFO found that the previous three instalments had been collected successfully and that the clause therefore did not apply. There had been no failed debit orders that would have triggered the process relied upon by the bank.
The investigation concluded that the bank had effectively applied set-off without the customer’s authorisation.
Because the account remained in arrears, a refund would simply have increased the outstanding debt. Instead, the NFO awarded the complainant R3 000 for distress and inconvenience.
Both cases point to the same principle: banks may have the right to enforce agreements and recover money, but they must still follow the proper procedures.
Agreement and disclosure matter
Another case centred on a mortgage loan that was approved in 2021 but only finalised in 2024 after a suspensive condition was eventually met.
The complainant believed he was obtaining a mortgage at an interest rate of 7% and a monthly instalment of about R19 000.
When the loan was finally registered, however, the applicable interest rate was 11.5%, and the monthly instalment had increased to more than R28 500.
The bank argued that the agreement had effectively been concluded in 2021 and that the increase simply reflected changes in the prime lending rate.
The NFO’s investigation uncovered two important facts.
The first was that the complainant had never signed the mortgage agreement in 2021. The second was that, shortly before signing in 2024, he had specifically queried the interest rate and had been told that it remained 7%.
The NFO questioned whether there had ever been true consensus between the parties on the interest rate and instalment amount.
It also raised concerns about whether the cost-of-credit disclosures remained compliant with the National Credit Act, given the lengthy delay between approval and registration. In the ombud’s view, these issues raised the possibility that the agreement could be void or voidable.
Rather than continue the dispute, the bank offered the complainant two options: either retain the mortgage at the originally quoted 7% rate and receive a refund of additional interest already charged or cancel the agreement entirely.
The complainant chose to keep the mortgage, and the bank amended the interest rate accordingly.
The dispute shows how important accurate disclosure and clear communication are when credit agreements are concluded.
Not every complaint succeeds
The annual report also makes another point: not every financial loss is the bank’s responsibility.
One complainant approached the NFO after falling victim to an investment scam.
Believing they were investing with a legitimate company, the customer made several payments through a mobile banking app after being promised quick access to investment returns.
When the promised returns failed to materialise, and the company became unreachable, the complainant realised they had been defrauded.
The bank’s records showed that the payments had been authorised by the customer and that the customer had increased their electronic payment limits at the request of the fraudsters.
Although the bank attempted to recover the money once the fraud was reported, the funds had already been withdrawn.
The NFO found no evidence of negligence or maladministration by the bank and dismissed the complaint.
The fact that the complainant had been defrauded did not, by itself, make the bank responsible for the loss.
Another complainant approached the NFO believing that a bank had breached the in duplum rule because the total amount repayable on a loan exceeded twice the original amount borrowed.
The ombud found that the complaint was based on a misunderstanding of the law.
The in duplum principle becomes relevant only when a consumer is in default. It does not prevent the total repayment amount under a credit agreement from exceeding the original loan amount. Rather, it limits the interest and fees that may accumulate while the consumer remains in default.
The case shows that consumer protections are often more nuanced than they first appear.
The bigger lesson
Viewed individually, the six banking disputes selected for inclusion in the NFO’s 2025 Annual Report dealt with very different issues.
Taken together, they reveal a clear pattern.
The strongest complaints were not necessarily those involving the largest losses. They were the cases where something in the process went wrong: key information was not disclosed, procedures were ignored, or customers were not treated fairly.
The unsuccessful complaints, on the other hand, involved misunderstandings about legal protections or losses that could not be linked to any maladministration by the bank.
Many disputes begin long before a complaint reaches an ombud. They start when customers misunderstand their rights, when banks fail to communicate clearly, or when processes are not followed properly.
One lesson runs through all six cases: the details matter.
