Clients win in bank disputes

12 May 2004 - Finance 24

The Banking Ombudsman has settled more than half of all complaints against banks in favour of the client, the latest report from the Ombudsman shows.

he bank from which the Ombudsman received the most complaints was Absa, followed by Standard Bank, Nedbank, and First National Bank (FNB).

Unsatisfied banking customers managed to get refunds to the total of R11.1m from their banks after complaining. This is much more than the R8.7m which has been reclaimed from banks and refunded to customers in 2002 and the R7.8m in 2001.

Advocate Neville Melville, Ombudsman, said that this wasn't necessarily an indication of a bank's general handling of complaints.

"Next year we will show how the complaints were resolved in reality."

If a bank receives quite a lot of complaints, it could indicate that the Ombudsman's activities were brought to the attention of clients.

The Ombudsman opened 704 complaint files against Absa. This means that the complaints could not be solved internally at the bank and that the Ombudsman's office had to take matters further.

For Standard Bank, 614 complaint files were opened, 495 for Nedbank, 358 for FNB, 94 for Africa Bank, 13 for Mercantile and 44 for the rest. The latter includes Investec Bank, Ithala Bank, Teba Bank, VBS Bank and Saambou.

The Ombudsman's office received 10 884 telephonic queries from dissatisfied banking customers during 2003 financial year. Of these, 2 904 were taken to the next level of dispute resolution, where written applications for assistance were submitted. The next step was to open complaint files, which increased by 26% to 2 294 in 2003 compared to the previous financial year.

Misadministration at 23% remains the largest source of complaints. Misrepresentations replaced fraud as the second largest source of complaints at 16% of total complaints. Unfair treatment by a bank increased sharply from 8% in 2002 to 11%.

A total of 2 242 complaints were completed in 2003, 11% higher than the previous financial year. Now it takes 83 days to complete a case. Of the cases that were completed, 47% were processed within two months and 93% within six months. This is an improvement of 77% from 2002.

Melville said that there was an increased focus on mediation. "Mediation is a much better way to settle complaints. It offers both parties the opportunity to air their grievances so that they can be solved in an unbiased way."

The Ombudsman for the first time released the name of the bank that neglected to act on its recommendations. This dubious honour belongs to FNB. A complaint was received that an FNB advisor convinced former council workers near Gariep Dam to invest in an investment product that lost its value. The Ombudsman advised FNB to compensate these workers for their losses, but FNB paid out only part of the compensation. This is against the spirit of how the Ombudsman's office wants the complaints settled, the report said.