Banking Ombudsman gets record number of complaints in 2020

The Ombudsman for Banking Services received a record number of complaints in 2020 when it opened 7,717 formal cases in 2020, an increase of 19% compared to 6,472 cases in 2019. During 2020 the ombudsman also closed 7,230 cases, an increase of 18% compared to 2019 when 6,133 were closed.

A total of 8,389 case referrals were also done, when consumers did not complain to their banks first. In 2019 a total of 4,709 were referred. According to Reana Steyn, the ombudsman, this could be due to consumers battling to get hold of their banks during lockdown.

During 2020 the ombudsman managed to recover R16 million which was paid back to consumers.

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Types of complaints

In a change from previous years, internet banking complaints decreased in 2020 and is no longer the largest category of complaints as in the two previous years. Current account complaints have taken over as the category with the most number of complaints. The most complaints were about:

• 1,338 complaints about current accounts relating to fraud, fees and charges, as well as banks’ failure to notify consumers of account closures. These complaints made up 80% of the current account matters. In 2018 these complaints made up 10% of complaints and 12% in 2019. In 2020, there was a further 7% increase from 2019 complaints. In 465 (35%) of these cases, a finding was made in favour of the complainant.
• Internet banking fraud only made up 13% of the cases in 2020. It was 22% in 2018 and 18% in 2019. A. total of 981 internet banking fraud cases were closed in 2020 compared to 1,292 in 2019. 73% of these complaints were resolved in favour of the banks and 197 (27%) in favour of the consumer.
• Credit card complaints decreased from 15% in 2019 to 11% in 2020, but these complaints remained in third place. A total of 895 credit card related complaints were closed in 2020 and 76% were resolved in favour of the bank, while 24% (266) were resolved in favour of consumers.
• ATM-related complaints accounted for 9% (732 cases), 4% less than in 2019 when ATM complaints made up 13% of cases. The majority of the issues raised were still fraud related. A. total of 84% (617) were resolved in favour of the bank and only 16% (115 cases) in favour of the consumer.

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According to Steyn the common thread in all these categories was the majority of the consumers unfortunately fell victim to fraudulent scams.

“The reason why the majority of these matters were found in favour of the banks was that after a full investigation we were forced to conclude that the fraudsters managed to manipulate the consumers into transferring funds into their accounts or to give them their confidential banking details to use in fraudulent transactions.”

Other complaints were about:

• personal loans (11% or 831 cases) with findings in favour of consumers in 31% (225) of the cases
• mortgage loan finance (8% or 583 cases) with findings in favour of consumers in 28% (155 cases) of the cases
• vehicle finance (7% or 454 cases) with findings in favour of consumers in 22% (87) of the complaints.

In many of these cases complaints were related to banks not responding to applications for Covid-19 relief plans and loan term extensions due to payment holidays.

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Bank performance

The ombudsman received more complaints compared to previous years about most of the banks, with only Absa recording a reduction of 36% in complaints. However, Steyn cautions that the number of files opened against a bank does not necessarily reflects the bank’s complaints handling performance.

Complaints against Absa decreased from 1,483 in 2019 to 943 in 2020 (36% decrease), while First National Bank had 2,197 complaints (22% increase), Standard Bank 1,572 complaints (28% increase), Nedbank 1,217 cases (10% increase) and Capitec Bank 1,259 cases (39% increase).