Have a complaint about your bank? This is what can go wrong and how you can resolve it

The Banking Ombudsman put R25 735 594.17 back into consumers’ pockets after resolving 8 008 complaints against banks last year about current accounts, personal loans, savings accounts, credit cards and home loans.

What is even more interesting are some of the complaints about banks highlighted in the report and how the ombudsman resolved them. Consumers can learn from these complaints either to avoid running into trouble or about how to tackle problems based on the principles each case was decided on.

Mobile banking application fraud

A consumer fell victim to mobile banking application fraud when a fraudulent SIM swap was conducted on the consumer’s registered cell phone number. The facts showed that his mobile banking application PIN was reset at the time of the fraudulent transactions.

The Banking Ombudsman considered whether the consumer was negligent or if the workings of the bank’s mobile banking application PIN reset process itself was unsafe or unsecure. As part of the mobile banking application PIN reset process, only the consumer’s identity number, cellphone number and debit card number were required.

The ombudsman concluded that the mobile banking application PIN reset process was not safe and secure as no confidential banking information was required as part of the reset process. As such, there was no evidence that the consumer was negligent in compromising any confidential banking information.

Therefore, the ombudsman recommended that the bank reimburse the consumer for his loss of R30 000. The bank agreed and reimbursed the consumer.

PRINCIPLE: In accordance with the Code of Banking Practice, the bank has a duty to provide safe and secure banking services.

ALSO READ: Banking Ombudsman puts R25 million back in consumers’ pockets

When the new car starts costing too much

A consumer entered into a vehicle finance agreement with the bank. Excited about owning a new vehicle, he signed the agreement on 14 September 2022, believing that the interest rate would remain fixed throughout the loan term. However, to his dismay, he later discovered that the interest rate was variable, causing his monthly payments to steadily increase with the repo rate.

He complained, urging the bank to revert to the initially agreed fixed rate and refund any excess payments. Alternatively, he wanted to return the vehicle and cancel the agreement.

However, the bank said he indeed signed an agreement acknowledging the variable interest rate, which was tied to the prime rate and subject to change. Despite the consumer’s claim of requesting a fixed rate, the bank insisted that only a variable rate was offered and accepted.

In addition, the bank indicated it can only assist with the cancellation of the agreement if the consumer voluntary surrenders the vehicle after which it would be sold and if there is a shortfall, he would be held liable for it.

After the ombudsman investigated, it was revealed that the consumer actually signed two agreements. The first agreement contained handwritten amendments that changed the variable interest rate to a fixed rate, with signatures next to the changes. However, the second agreement only reflected a variable rate. Additionally, the dealership provided a statement confirming that the consumer requested a fixed rate, but the agreement they received reflected a variable interest rate.

The dealership explained to the consumer that for the vehicle to be released, a signed contract was required and reassured him that the agreement could be re-signed once an amended contract with a fixed rate is received from the bank.

The ombudsman said it was clear that the consumer wanted a fixed interest rate and from the two agreements and the discrepancies between them, it seems evident that the consumer was misled.

In addition, the ombudsman did not believe that the complainant was treated fairly and requested the bank to consider this information and assist their customer who clearly intended and was under the impression, that he would receive a fixed interest rate.

The bank then advised that the dealership had consented to cancel the initial agreement and settle the vehicle finance account. A new agreement will be concluded with the customer on a fixed interest rate, which will be fixed at the prime rate.

PRINCIPLE: Banks must ensure due diligence when agreements are signed and that the agreements are prepared based on the terms and conditions discussed between the parties.

ALSO READ: These banks are the best at resolving complaints – Ombudsman

Banks must stick to their own rules too

When a consumer died, he held a revolving credit loan account with the bank. The executor then queried why the credit insurance on the account did not settle the outstanding balance of approximately R131 198.82.

The bank’s response was that the policy had lapsed before the consumer’s death and therefore the policy was not active.

As part of the ombudsman’s investigation, it perused the insurance policy and noted that when a customer has defaulted on two premiums, the policy would be cancelled. From perusal of the account statements, it was confirmed that the customer did default on payment of insurance premiums for three months.

It was further noted from the policy terms and conditions that it was required of the insurer to give the customer one month’s notice of cancellation.

In addition to the policy terms and conditions requiring the insurer to give the customer one month’s notice of cancellation, there are also statutory requirements on the insurer in this regard, according to the Long-Term Insurance Act.

The bank confirmed that the required notices were not sent to the deceased at the time that the policy was cancelled. The purpose of the notice is to firstly draw to the customer’s attention that premiums have not been paid and that they are now at risk of the policy being cancelled.

This notice would therefore allow a customer an opportunity to either reinstate the policy or seek appropriate alternate cover elsewhere. By failing to alert the customer to the policy having been cancelled, the customer was not afforded the opportunity to seek alternate cover prior to his death to ensure he was adequately covered for all eventualities.

Consideration was also given to section 3 of the Conduct Standards for Banks, which speaks to culture and governance and places a duty on the banks to act fairly with due skill, care and diligence amongst other things.

In consideration of such duties placed on the bank together with the terms of the policy and statutory requirements, which requires notice to be sent, the ombudsman recommended that the bank reconsider the death claim and that it be approved and the account settled. The bank accepted the recommendation and the account was settled in full and closed.

PRINCIPLE: Banks must ensure that they abide by the terms and conditions contained in their agreements and that customers be given fair warning regarding cancellation of insurance policies.

ALSO READ: New ombud scheme will handle complaints about insurance, banking and credit

Banks have a duty to help consumers get their money back

A consumer hired a rental car which he confirmed he returned to the rental company in a damaged condition. The rental company said it would contact him regarding the costs to repair the damages to the vehicle.

However, a week later, the rental company debited the consumer’s account for R19 607.00. The consumer disputed this charge and requested that the bank assist him to reverse the charge on his credit card account.

The bank advised him that the dispute was between him and the car rental company. It also submitted that he provided the merchant with his card details when he hired the vehicle and that the bank only acted as a facilitator in the payment process.

Furthermore, the bank relied on the fact that the consumer confirmed that the vehicle was returned damaged and referred to the agreement between the consumer and the merchant which stated that the consumer would be held liable for any damages.

As part of the ombudsman’s investigation, it considered the Mastercard Rules pertaining to chargebacks related to charges for loss, theft, or damage. The rule requires authorisation for any additional charges, whether or not the agreement is making provision for this or not.

The cardholder rules consider these additional charges a separate transaction for which authorisation must be obtained from the cardholder. The bank was unable to furnish evidence that the merchant provided any proof that the complainant was made aware or agreed to this charge before it debited the account.

In this instance, the ombudsman noted that when the chargeback was raised with the bank, the bank was supposed to request that the merchant provide proof of compliance with the rules. In the absence of the customer’s specific authorisation that this amount could be charged to his account, the ombudsman recommended a full refund as the bank had sufficient grounds to proceed further with the chargeback.

The bank accepted the recommendation and refunded the consumer in full.

PRINCIPLE: Banks must ensure that they adequately assist customers where a valid chargeback right exists against a merchant. A merchant requires a separate authorisation from a customer should they wish to debit additional charges to a customer’s account. The complainant held a home loan account which he defaulted on. The bank proceeded with legal action due to the arrears on the account.

ALSO READ: Here’s what you can learn from the most common banking complaints

Banks must be fair and reasonable

A bank obtained judgment and a warrant of attachment for the consumer’s immovable property was granted. The court set a reserve price of R426 775. The bank proceeded with the sale and the property was sold above the reserve price. However, the sale did not proceed as the purchaser was unable to provide the required guarantees.

The bank applied for the sale to be set aside, which was granted by the court. A new warrant of attachment was granted by the court but this order did not include a reserve price. The bank proceeded with the sale of the property and the property was sold for R16 000. The sale realised a shortfall of R589 953.56, which the consumer remained liable for.

From a fairness and reasonableness perspective, the ombudsman believed that it was unreasonable for a property to be sold for R16 000, especially when the bank was aware that there was a reserve price initially set for R426 775.00 and that the bank had previously received an offer for more than the reserve price.

Therefore, the ombudsman recommended that the bank give the customer the benefit of the reserve price and reduce the shortfall amount that he remained liable for. The bank accepted the recommendation and wrote off an amount of R473 074.35 on the home loan shortfall amount.

PRINCIPLE: Banks must ensure that the principles of fairness and reasonableness are considered in every dealing with a customer.