Banking Ombudsman recovers R11 million for clients15 March 2004 - Star personal
Finance The Ombudsman for banking Services recovered R11.1million for bank clients last year, compared with R8.7million in 2002. Incidents of unfair treatment by banks increased dramatically from three percent of all the complaints submitted to the ombudsman in 2002 to 11 percent last year, Neville Melville said in his annual report. Maladministration which accounted for 23 percent of the complaints sent to the ombudsman last year topped the list of complaints. Maladministration refers to administrative faults, such as losing documents or failing to obtain signatutres. Misrepresentation was the second largest souce of complaints in 2003. In 2002, fraud occupied secoond place. Misrepresentation most often occurs when brokers misrepresent banks' investment products to consumers. For the first time, the ombudsman's report gave a breakdown of the number of complaints received by each bank. Of the 2294 case files opened by the ombudsman's office last year, 704 were opened at Absa, 614 at Standard Bank, 495 at Nedbank and 358 at FNB. But Melville cautioned against using these figures as an indicator of each bank's service performance or its ability to handle complaints, because each bank varies considerably in size, its client profile and type of product it offers. A comparatively high number of complaints may indicate that a bank's efforts to inform its clients about the ombudsman's office were successful or that a bank refers more of its clients to the ombudsman than do other banks, he says. Melville says he is concerned that the banks are not doing enough to inform their clients about the ombudsman's office. Research shows that only 12% of people surveyed were made aware of the services of the ombudsman's office by their banks, as opposed to 13% through the media. In its Code of Banking Practice, the Banking Council, which represents South Africa's banks agrees to publicise the ombudsman's services. The Code of Banking Practice, which was introduced in 2000, sets out the standards to which the banks must adhere when doing business withy you. The ombudsman for banking services is the only entity tasked with enforcing the code. If your bank fails to live up to its undertakings in the code, your only recourse - apart from taking up the matter with the bank itself - is the ombudsman. All the banks that belong to the Banking Council have voluntarily agreed to abide by the ombudsman's recommendations. Only one bank failed to follow a recommendation by the ombudsman in 2003, Melville says. The complaint concerned a financial adviser from FNB, who advised a group of former municipal employees to place their retirement savings in one of the bank's investment products. Some years later, the investment suffered a severe loss in value. After adjudication, the ombudsman recommended that FNB reimburse the pensioners. FNB declined to follow his recommendation and instead offered to reimburse the pensioners a percentage of their losses. The pensioners accepted FNB's offer. Melville says that although the complaint was finally settled, FNB's actions were contrary to the spirit and nature of the ombudsman's scheme. FNB, in making the offer to the pensioners, admitted that it made errors when placing the investment. FNB made its offer to the pensioners two years after these errors were pointed out to the bank, he says. However, Melville says FNB's handing of this case was not indicative of its overall approach to complaints.
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