Internet banking complaints on the rise – ombud gives almost R20 million back to consumers

Internet banking complaints increased the most during 2021 according to the Banking Services Ombudsman, who also managed to put over R19 400 000 back into consumers pockets, although only 27% of the complaints were settled in favour of consumers.

According to the ombudsman’s annual report, her office opened a record 8 257 complaints during 2021, a 7% increase from 2020 and 28% more than in 2019.

Over 10 330 complaints were referred to the banks because the consumers did not approach their banks first to resolve their complaints.

Matters are only converted into formal cases if the bank cannot solve the problem.

In 73% of the matters resolved, the findings were in favour of the banks, says Reana Steyn, the ombudsman. This means that in 5 846 (72.7%) cases her office found that the consumer did not have a case on any legal or fair grounds.

Where consumers did have a case, the banks concerned were held 100% liable for claims in 15.9% (1 276) of cases, while in 4.5% (363) of these complaints, the banks were found partially liable. In 1 639 (20.4%) of matters the ombudsman concluded that there was some wrongdoing on the part of the banks.

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This is what consumers complained about

Steyn says many of the complaints involved bank customers becoming victims of various types of fraud, but internet banking complaints reclaimed its position as the category with the most complaints in 2021, accounting for 19% of the total complaints opened.

“This is an alarming 6% increase from 2020 and a worrying statistic as it goes against the progress made in 2020, where the number of internet fraud victims had dropped significantly to a record low of 13% of the total.”

Other complaints were about service, maladministration, debt stress, account closures and fee or interest rates disputes.

These are the main complaints:

• current account: 16% of total cases opened, a 3% decrease from 2020
• personal loan: 11%, same as the year before
• mortgage finance: 8%, same as the year before
• credit card: 9%, a 2% decrease
• vehicle finance: 8%, down 2%
• ATM: 7%, a 2% decrease.

Steyn points out that in previous years, such as 2015, ATM complaints constituted the largest number of complaints, but because people now choose technology to do their banking, internet banking has taken over, obviously heavily influenced by the pandemic.

In the majority of these complaints, the losses and inconvenience could have been avoided if consumers were more sceptical of fraudsters posing as bank personnel.

“It is important that consumers protect their confidential banking information and never accept assistance from strangers at the ATM.

Consumers should also be more involved in the management of their accounts by constantly checking their account statements and engaging with the banks for assistance at the first sign of financial distress.

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Complaints about specific banks

Looking at bank-specific complaints, the ombudsman’s office saw a notable increase in cases for most banks compared to the previous year.

In 2020, Absa recorded a reduction in the number of cases (down by 36%), but 2021 was the opposite.

Only First National Bank (FNB) recorded a significant decrease in the number of cases opened in 2021.

According to Steyn this dramatic decrease can largely be attributed to the initiatives implemented by the bank’s CEO and staff to ensure that the bank aligns itself with the Treating Customers Fairly (TCF) principles and the requirements of the Conduct of Financial Institutions (COFI) Act.

These are the formal cases opened against the banks in 2021:

• FNB: 1 452 complaints, a 34% decrease from 2 197 in 2020
• Standard Bank: 2 070 complaints, an increase of 31,6% from 1 572 in 2020
• Capitec: 1 651 complaints, a 31,1% increase from 1 259 in 2020
• Absa: 1 068 complaints, a 13,3% increase from 943 cases in 2020
• Nedbank: 1 273 complaints, a 4,3% increase
• TymeBank: 233 complaints, an 870,8% increase from 24 in 2020 (note that these complaints came off a very low base in 2020)
• Discovery Bank: 55 complaints, a decrease of 26,7% from 75 in 2020.

Steyn says consumers must remember that the number of cases does not indicate the bank’s overall performance or the way they deal with complaints.

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Vulnerable consumers 

The ombudsman’s office also collected the statistics regarding vulnerable consumers for the first time in 2021:

• 70% were classified as such due to age
• 22% between the ages of 75 and 85 were classified as vulnerable due to a life event such as retrenchment or the death of a spouse/partner
• 5% of vulnerable consumers are older than 85.