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Banking ombud reveals significant increase in complaints against banks

Internet banking fraud cases were the biggest category of complaints by bank clients.
Internet banking fraud cases were the biggest category of complaints by bank clients.
Image: 123RF/Olivier Le Moal

A record number of complaints about bank conduct was received by the ombudsman for banking services (OBS) last year, with internet banking fraud cases the biggest contributor.

Internet fraud cases accounted for 19% of total complaints received.

“This is an alarming 6% increase from 2020 and a worrying statistic, as it goes against the progress made in 2020 where the number of internet fraud victims had dropped to a record low of 13% of total complaints,” said ombudsman Reana Steyn in the OBS’s annual report released on Tuesday.

In most of the complaints, the losses suffered as well as the inconvenience experienced could have been avoided had consumers been more sceptical of fraudsters posing as bank personnel.

As always, the OBS annual report reveals the number of cases opened against each bank for the year. In 2021, Standard Bank topped the list, followed by Capitec, FNB, Nedbank and Absa.

FNB saw a 34% decrease in cases, which Steyn attributes to the CEO and staff “looking past the black letter of the law in respect of the merits of a complaint and applying considerations of fairness and reasonableness” where possible.

But Standard Bank saw a complaints increase of 31.6% and Capitec’s complaints were up 31.1%, with Absa and Nedbank’s cases increasing less significantly — 13.3% and 4.3% respectively.

Steyn cautioned that the number of cases opened should not be regarded as an indication of a bank’s overall performance or the way they deal with complaints.

“Banks vary in size, client profile and product mix, and with fraud we have seen over the years that the fraudsters move from bank to bank, targeting a certain group of consumers through phishing e-mails, vishing calls and so on.

“All of these factors impact on the number of complaints made against any bank.”

In 73% of the matters resolved by the OBS last year, the findings were in favour of the banks, meaning the adjudicators found there was no legal or fair grounds to uphold the complaint.

When placed in a position to mitigate a customer’s loss, the bank has an obligation to ensure it does everything necessary to assist the customer
Ombudsman for banking services

Of the matters decided in favour of the complainants, more than R19.4m was awarded because of the OBS’s direct intervention.

The report includes a number of case studies involving unnamed banks, including one involving an EFT into the wrong account.

A pensioner told his private banker he had made a payment into a third-party account with the same bank by mistake.

“The funds cleared before she could action a reversal so she took the initiative and contacted the beneficiary account holder. She advised him that the funds were paid into his account erroneously and requested his consent to reverse the funds.”

When the beneficiary discovered the unexpected windfall in his savings account, he transferred the funds to his credit card account.

The banker asked him to move the funds back to his savings account to allow the bank to process the funds reversal.

He agreed and moved the funds back to his savings account, but that’s when the banker dropped the ball.

In the seven hours it took the banker to get that R38,500 back into the pensioner’s account, the beneficiary changed his mind and transferred the money back into his credit card account.

“While acknowledging the consultant’s proactiveness when she initially assisted the complainant, we couldn’t ignore that given the urgency of the matter, specifically with these types of customer complaints, had she immediately reversed the transaction after the beneficiary account holder returned the funds to his savings account, the complainant would not have suffered a loss of R38,500.

“The private banker had a duty of care to action this matter urgently or give it the priority it warranted on the day.”

The OBS recommended that the bank reimburse the loss in full and it did so.

The lesson: “When placed in a position to mitigate a customer’s loss, the bank has an obligation to ensure it does everything necessary to assist the customer.

“Any failure on the part of the bank will result in the bank being held liable for the loss it was in a position to prevent.”

GET IN TOUCH: You can contact Wendy Knowler for advice with your consumer issues via e-mail: consumer@knowler.co.za or on Twitter: @wendyknowler.

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