While the banking sector was regulated by the SA Reserve Bank, the market conduct regulation was poor — particularly compared with the often intrusive regulation of insurance, investments and financial advisers by the old Financial Services Board.
More recently some credit-related conduct issues have come under the orbit of the National Credit Regulator. But otherwise the only avenue for consumer complaints was the ombudsman for banking services (OBS). It has been getting busier; its call centre fielded 26,970 calls in 2018, 58% more than in 2016. We can only hope that the threats to merge this and its sister offices in a mega state-controlled institution won’t happen. Wouldn’t it end up as the consumer complaints department of the new market conduct regulator, the Financial Sector Conduct Authority?
As part of the civil service, you can be sure the office’s turnaround times would spin out of control: 41 business days to close a case might seem slow, but look how long Tom Moyane’s SA Revenue Service took to resolve far simpler issues. As a voluntary ombudsman’s office the OBS does not have to follow the strict letter of the law; unlike a statutory office such as the Pension Funds Adjudicator, it can apply equity or fairness. It is funded by the banks but customers win a quarter of its cases.
The OBS has a free alternative dispute resolution service for those people who can’t get a satisfactory settlement from their bank.
To be fair, it asks customers to start by complaining directly to their bank’s dispute resolution department, get a reference and allow 20 working days before proceeding to its office.
It is amazing how slow the death of the cheque and the in-branch cash deposit has been
Absa had the most cases brought against it — 1,776 — followed by FNB, with almost 1,600. Nedbank and Standard Bank both had more than 1,200. Capitec had more than 1,000 in spite of its relatively low product base, with no secured lending products such as home loans or vehicle finance. Ironically, over the past three years VBS Mutual Bank had received only five complaints, so it is no leading indicator.
Consumer education
Ombud Reana Steyn says that more than 70% of complainants are over 40, what she unkindly calls the older generation. Internet fraud at 22% is the largest category of complaints, and along with ATM fraud makes up 36% of cases. Wrinklies are more prone to falling victim to bank fraud. The office is using consumer education to address the issue.
The next three largest categories of complaints are credit card, personal loans and home loans. And can you believe that in 2018 there were still two disputes concerning the amount of cash the teller had given the customer and a further 12 over the amount of cash deposited over the counter at the branch? There were also 28 complaints concerning cheques. Banking is still in transition and it is amazing how slow the death of the cheque and the in-branch cash deposit has been. It will certainly be speeded up by the new digital banks, and by supermarkets such as Pick n Pay being only too happy to offer and take cash for almost nothing.
The ombudsman’s office is still disproportionately used by white people, who make up a quarter of the complainants, but its reach is widening. A further quarter is African men over 40, and 16% are similarly mature African women. Under-30s make up just 8% of complainants overall, often because they don’t know their rights, though some would say they are more equipped to avoid internet and ATM fraud.
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