The Ombudsman for Banking Services wants the swift introduction of deposit insurance‚ particularly to benefit less sophisticated customers.
This echoes similar calls from the International Monetary Fund that SA introduce a safety net for customers if their bank fails‚ and to protect the financial system.
Ombudsman Clive Pillay said at the weekend the banking industry should “step up its sluggish response to the implementation of reforms and adopt a more decisive stance‚ particularly to deposit insurance”.
He said banks had argued deposit insurance would be expensive.
“But I think there is just an unwillingness to investigate the pros and cons fully.”
Deposit insurance involves banks paying a small fee on deposits so if they face insolvency customers will be paid a major portion of their deposits.
This type of insurance is common globally. China is the most recent convert‚ with the planned introduction of insurance for deposits of up to 500000 yuan from next month.
Pillay also called for lower remittance costs in SA‚ the most expensive of the Group of 20 countries for sending remittances‚ according to World Bank research.
The global average cost of sending remittances in the third quarter of last year was 7.9% of the value sent‚ while it was 11.3% to send the equivalent of $200 (R2415) to sub-Saharan Africa‚ the World Bank found. In SA‚ sending remittances costs an average of 19.5% of the value.
The Payments Association of SA was working on reformulating tariffs for sending remittances‚ Pillay said.
Despite his criticism of the banks‚ Pillay said they had always been willing to participate in the ombud processes.
The ombud resolved 4179 cases last year‚ 69% in favour of banks and 31% in favour of consumers. In 2013‚ 60% of complaints were resolved in favour of banks and 40% in favour of customers.
Standard Bank accounted for the highest number of cases (1630)‚ followed by First National Bank (787). Capitec (640)‚ Absa (639) and Nedbank (635) had a similar number of cases.
Pillay said the favouring of the banks last year was not typical‚ as historically there had been an almost equal split between cases resolved in favour of consumers and those in favour of banks.
The anomaly last year was due to two factors.
First‚ the number of ATM card-swapping complaints “increased dramatically” from 27% of ATM complaints in 2013 to 60%.
In these cases‚ customers had tended to be negligent.
Second‚ the ombud and the banks were deadlocked on how to apply and interpret the legal principle of the duty of care. This had been referred to retired judge Frans Malan for a ruling.
Bank ombud calls for deposit insurance
The Ombudsman for Banking Services wants the swift introduction of deposit insurance‚ particularly to benefit less sophisticated customers.
This echoes similar calls from the International Monetary Fund that SA introduce a safety net for customers if their bank fails‚ and to protect the financial system.
Ombudsman Clive Pillay said at the weekend the banking industry should “step up its sluggish response to the implementation of reforms and adopt a more decisive stance‚ particularly to deposit insurance”.
He said banks had argued deposit insurance would be expensive.
“But I think there is just an unwillingness to investigate the pros and cons fully.”
Deposit insurance involves banks paying a small fee on deposits so if they face insolvency customers will be paid a major portion of their deposits.
This type of insurance is common globally. China is the most recent convert‚ with the planned introduction of insurance for deposits of up to 500000 yuan from next month.
Pillay also called for lower remittance costs in SA‚ the most expensive of the Group of 20 countries for sending remittances‚ according to World Bank research.
The global average cost of sending remittances in the third quarter of last year was 7.9% of the value sent‚ while it was 11.3% to send the equivalent of $200 (R2415) to sub-Saharan Africa‚ the World Bank found. In SA‚ sending remittances costs an average of 19.5% of the value.
The Payments Association of SA was working on reformulating tariffs for sending remittances‚ Pillay said.
Despite his criticism of the banks‚ Pillay said they had always been willing to participate in the ombud processes.
The ombud resolved 4179 cases last year‚ 69% in favour of banks and 31% in favour of consumers. In 2013‚ 60% of complaints were resolved in favour of banks and 40% in favour of customers.
Standard Bank accounted for the highest number of cases (1630)‚ followed by First National Bank (787). Capitec (640)‚ Absa (639) and Nedbank (635) had a similar number of cases.
Pillay said the favouring of the banks last year was not typical‚ as historically there had been an almost equal split between cases resolved in favour of consumers and those in favour of banks.
The anomaly last year was due to two factors.
First‚ the number of ATM card-swapping complaints “increased dramatically” from 27% of ATM complaints in 2013 to 60%.
In these cases‚ customers had tended to be negligent.
Second‚ the ombud and the banks were deadlocked on how to apply and interpret the legal principle of the duty of care. This had been referred to retired judge Frans Malan for a ruling.
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