Stats show ombudsman favours wronged business

August 2004 - Big News

Half of all complaints brought by businesses to the Banking Ombudsman are settled in favour of the businesses, according to recent statistics

• Fraudulent cheques
• dual signing power between partners and the bank, where only one partner approves; and
• bank using private funds to pay for the business debts of the owner of a close corporation.

Business owners who have been wronged by their banks can approach the Banking Ombudsman. The Ombudsman  is a free legal service and can award settlement cost to those who complain either as business owners or in their own personal capacity. 

Ombudsman Banking Services' Advocate Neville Melville says that business owners with a turnover of R5 million or less can file a written complaint to the Ombudsman as long as the amount in question is under R800 000. Melville says the reason they place a cap on the amount of money in question is that the Ombudsman aims to resolve the situation as efficiently as possible - usually within 50 days.

Businesses with over R5 million turnover, he says, can more easily afford lawyers' fees to handle a complaint.

Business owners who are in dispute with their bank must first endeavour to reach a solution to their problem with their bank itself.

Should this fail and the bank has not resolved the complaint in under 20 days, the next step for a business owner is to approach the Ombudsman for Banking Services.

The bank will usually refer complainants to the Ombudsman, but Melville says most complainants have come the way of people hearing about the service via newspapers or from others who've made use of it. Complaints need to reach the Ombudsman within three years of the alleged misconduct by the bank.

If a complaint needs to be investigated, business owners don't have to attend any hearings, as the matter is dealt with by way of writing. the Ombudsman, however, can send an official from the office to investigate.

The Ombudsman operates independently from the banks and is not influenced by them.

In 2002, the position underwent a name change from Banking Adjudicator to Ombudsman to make the function of the office more clear. Six percent of the cases opened so far for 2004 (up to July) were complaints received from businesses. A total of 49% of the company complaints closed were decided in favour of the company, 44% in favour of the bank and seven percent fell outside the jurisdiction of the Ombudsman.