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It's too late now

December 2004 - Blue Chip Magazine

In the four and a half years that I had been dealing with customer complaints about their banks, I have certainly encountered many instances of poor or improper treatment meted out by the banks to their customers. The reports that we put out on an annual basis and the statements that we make in the media bear testament to this.

Our statistics over the last few years have shown that, on average, we have resolved slightly more complaints and disputes in favour of customers than in favour of their banks. This may seem a good thing from a customers' viewpoint and apparent evidence of our even-handedness and independence of both parties, but in an ideal world, we would always find in favour of the banks because they would already have resolved all the legitimate customer grievances themselves. This is because we are what is called an office of last resort.
A person with a complaint must attempt to resolve it through the bank's own internal process before bringing it to us. Most queries received by the banks are, in fact, dealt with by them satisfactorily, in house.

Of course, the blame does not always rest at the feet of the banks. I have noticed that there is a pattern of behaviour exhibited by some bank customers that causes them to contribute to their own losses. What they do is jump on the bandwagon too late in the day, and as a consequence, burn their fingers.

in 2000, many of the complaints that we dealt with related to people who found out the hard way that unit trusts couldn't keep up their fantastic pace of growth year after year. The following year, 2001, the day of reckoning came for equity-based investments, on September 11th. The bursting of the IT bubble had some knock-on effects also.

The next rising star was, paradoxically, the sinking Rand. A mediocre investment offshore would, nevertheless, pay dividends, so long as the Rand continued to plummet. This approach overlooked the rather trite reminder of unknown origin, in a different context, that "the tide turns at high water as well as a low" [order reversed by me].

Where is the money being made now? In property. I do not profess any special or expert knowledge about the property market, but I predict within a year or two we will be dealing with complaints regarding the banks' having advanced more to customers for the purchase of properties than they were able to repay: that the banks' property assessors had under-estimated the looming dip in the market when assessing the values of purchased properties, or that banks had foreclosed on mortgage loans on second homes which the purchasers were unable to let out because of the glut in the letting market.

It is not my intention to discourage people from investing or taking risks, but only to caution them to familiarise themselves with those risks, so that they can take carefully-considered decisions. Anyone contemplating making a financial commitment would be wise to seek information and advice also from sources other than their banks. They should not forget that the banks are in business to make a profit.

Whilst, in dealing with complaints, we certainly expect the banks to act fairly and honestly and in accordance with other promises they make in the Code of Banking Practice, we also generally expect bank customers to have taken reasonable precautions themselves.

A parting bit of advice: Remember, by the time the bandwagon gets to you, its axles have probably broken under the weight of those who got on before you!

The Ombudsman for Banking Services (OBS) offers a free dispute resolution service to personal and small business bank customers. Although the OBS is by no means a substitute for the court system, it has a record of being able to resolve successfully the vast majority of matters dealt with by it, and to do so much less stressfully and more speedily than the court system.