Banking Ombudsman puts R25 million back in consumers’ pockets

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

According to the Banking Ombudsman Annual Report for 2023, the formal cases about banking reported increased by 12% to 8 521and premature complaints increased by 11% to 13 373, with the total record number of cases opened totalling 21 641, an increase on the 2022 figures of 11%.

Most of the complaints were about current accounts which made up 39% of the total complaints, compared to 22% of the total complaints in 2022 and 19% in 2021. Personal loans and savings accounts were tied for second place on the list at 15%, followed by credit cards (9%), home loans (7%), car financing (7%), estates and trusts (3%), insurance (2%), savings and investments (2%), and business transactional accounts (1%).

The number of cases closed increased by 6% from 2022, while there was a 26% increase in calls managed by the call centre to 60 030 calls, compared to 47 819 in 2022. The Banking Ombudsman also managed 199 cases where complainants were classified as vulnerable consumers.

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Vulnerable consumers protected by ombudsman

A vulnerable consumer is defined as “someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care”. The top five sub-categories of vulnerable consumers in 2023 were people older than 65, as well as consumers experiencing life events such as retrenchment and the death of a life partner or spouse.

This was the last annual report for the Banking Ombudsman, Reana Steyn, as her office now becomes part of the newly formed National Financial Ombudsman South Africa (NFO). She will head the NFO.

“While complaint statistics provide valuable insights, it is crucial to interpret them within the broader context of each bank’s operational landscape and their initiatives in consumer education – specifically, how effectively they inform customers about the Ombudsman for Banking Services and the complaint procedures,” says Steyn.

“The relatively low number of complaints received indicates the South African banking sector’s commitment to transparency, regulatory compliance and customer satisfaction. Various factors such as the size of the bank’s customer base, play a significant role. Larger banks naturally manage more transactions and interact with a broader spectrum of clients, which can result in a higher volume of complaints, simply due to their scale,” she says.

Similarly, she says, the growth trends within a bank’s customer base and the overall volume of daily banking transactions also influence complaint frequencies. This must be kept in mind when looking at how complaints increased year-on-year at the banks.

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How different banks compared based on complaints

First National Bank (FNB) had a 15.1% increase in complaints compared to 2022, followed by Capitec with a 12.4% increase, while Nedbank, despite having the second-highest number of complaints, only had a 3.6% increase. The number of Absa complaints decreased by 8%, while Standard Bank’s number of complaints decreased by 5.3%.

Steyn says an indicator of how well banks handle complaints is their conversion rate of premature cases to formal complaints. According to the report, African Bank saw 79% of referrals being converted to formal complaints, followed by Bidvest Bank at 67%, Capitec and Nedbank at 64% each and Tyme Bank at 63%. FNB converted 37%.

The bank with the quickest turnaround time (referring to the number of days it took to close complaints, on average) was FNB at 74 days, while Discovery Bank, which has fewer cases than some of the bigger banks on average, came in at 89 days.

Tyme Bank had the highest percentage of cases decided in its favour at 87%, while African Bank had the lowest (62% in its favour). It should be noted here, Steyn says, that of the banks with the most cases Capitec did best in this section at 82%, followed by FNB at 77%.

In the category of estates and trusts, 49% of cases were resolved in favour of the complainant. Additionally, the highest category of complaints within the current account category, digital banking, saw the highest number of complaints. Steyn says this underscores that fraud, particularly internet banking fraud, phishing, vishing and push payment fraud, remains the top category of complaints.