Banking clients got R16m back as complaints to ombud surged in 2020

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The Ombudsman for Banking Services says fraud complaints are on the rise. In 2020, the Ombud held some banks accountable for not acting quickly to stop the fraudsters.
The Ombudsman for Banking Services says fraud complaints are on the rise. In 2020, the Ombud held some banks accountable for not acting quickly to stop the fraudsters.
  • The Ombudsman for Banking Services (OBS) says formal banks' customer complaints increased by 19% in 2020.
  • The Ombud says it was instrumental in recovering or refunding R16 million to customers.
  • As fraud complaints are on the rise, the OBS is holding banks accountable in some instances.

Bank customers were reunited with R16 million that they would have lost if they didn't approach the Ombudsman for Banking Services (OBS) last year.

On Wednesday, the Ombud released its 2020 annual report, which showed that it recovered or ordered refunds to the value of R16 million to consumers who had lodged complainants against their banks. In the previous year, the Ombud recovered R19.8 million for consumers.

The Ombud's office received 7 717 complaints in 2020, a 19% increase from 2019. More than a quarter (28.5%) come from frustrated FNB customers. Following FNB was Standard Bank which received 20% of the complaints, Capitec (16%) and Nedbank (15%).

Other banks that had complaints in hundreds were Absa (943), African Bank (255) and Bidvest (102). Of the big banks, Investec had the fewest complaints at 21. Among challenger banks, Discovery received the most complaints (75), and TymeBank received the least (34).

"Most of the big banks except for Absa saw an increase in the number of cases opened in 2020," said Edrich Buytendorp, the manager of assessments at the OBS.

Absa recorded a 37% decline in complaints that customers took to the Ombud's office.

But Buytendorp said the number of complaints received per bank was not an indicator of particular banks' complaints-handling processes or ill-treatment of customers. Instead, the size of their client bases and customer activism and awareness of the Ombud's existence plays a considerable role.

"Banks vary considerably in size, client profile and product mix and all these factors impact on the number of complaints made against each bank," said Buytendorp.

The number of complaints received per bank was also not indicative of how much was recovered by the Ombud from that bank. This is because the OBS did not disclose the number of cases closed in favour of complainants per bank. Instead, it showed cases closed in favour of clients per product type. In total, 28% of complaints were closed in favour of customers.

Fraud, fees and account closures frustrated customers

Last year, the OBS was flooded with complaints about current accounts, from fraud that had taken place to fees and account closures. Issues related to current accounts made up 19% of all complaints, overtaking internet banking frustrations which had become the biggest source of dissatisfaction over the years.

The other big sources of complaints were personal loans, credit cards and internet banking.

The Ombud said fraud played the biggest role in the increase of current accounts' complaints last year. But in many instances, the Ombud's office cannot legally hold banks responsible for customers' losses.

In some of the cases, however, it did make banks pay.

Banks must pay for not doing enough to stop fraud

In one case, a pensioner fell victim to internet banking fraud and lost R950 000 after compromising his login credentials. However, his bank had not made him aware that his investment was accessible online.

The Ombud also blamed the bank for releasing the funds from his account without the required notice period. So, it ordered the bank to reimburse him.

"[While] it was acknowledged that the customer was negligent, it was our finding that had the bank not made the investment funds available online, contrary to its mandate, then the loss would not have been suffered," said the OBS.

In another case, a customer paid R1.23 million to a conveyancer. Afterwards, the customer's emails were hacked, and the fraudster changed the beneficiary's banking details. The conveyancer's bank picked up the fraud and alerted the payer's private banker.

But the payer's banker didn't bother checking with its customer in time if the money was not intended for a different beneficiary. So the OBS ordered the bank to reimburse its customer all the money that was not recovered from the fraudster's bank account.

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UPDATE: The Ombudsman for Banking Services has updated the amount recovered for customers. The correct amount is R16 million, not R26 million. The Ombud's office has apologised for the error.

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