Has your bank failed you? Turn to ombudsman

Consumers can turn to the ombudsman for banking services if their banks fail to provide safe, secure and reliable banking products and services.

“The need for trust within the banking sector has never been more important in recent years than it is today. Recently the South African banking public heard of bank failures elsewhere and if that was not enough worry for the consumers, their stresses are further aggravated by their inability to meet their repayment obligations to their creditors brought about by the rising global cost of living crisis and the ongoing energy crisis,” says Reana Steyn, ombudsman for banking services.

“More than ever before, there is a general feeling that consumers need banks that they can rely on. Consumers must trust that the banks will act in the best interests and expectations of their customers. This is essential for a healthy bank-customer relationship and the protection of the integrity of the banking sector as a whole.”

Steyn says one of the core mandates of her office is to ensure that the banks comply with their undertakings to provide South Africans with safe, secure and reliable banking products and services. In the Code of Banking Practice, the banks also undertook to act fairly, reasonably and ethically towards their customers.

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Code of Banking Practice

What happens thn if your bank fails to act in line with its undertakings under the Code of Banking Practice? Steyn says her office has for more than 20 years provided relief to aggrieved bank customers, maintaining the much-needed confidence and trust within the banking sector.

She says the free ombudsman service offered by her office is vital to ensuring that all South Africans, irrespective of financial means, are afforded the opportunity to have their complaints investigated and resolved by experts, with proven alternative dispute resolution record, in the field.

How does her office resolve bank disputes? Steyn says at the core of the South African banking system is the expectation by consumers to be treated fairly. “With this comes the legitimate expectation that, when consumers are wronged, the bank concerned will, within reason, go out of its way to compensate the consumer.

What does this mean for consumers? Steyn says means that they are returned to the position they would have been in had the bank not acted in error. When the bank fails to do this, customers have recourse and are encouraged to lodge complaints with her office.

“Investigating and resolving banking complaints is our mandate and our office will go out of its way to amicably resolve any dispute. However, it is important to note that we do not have the mandate to enrich customers,” she warns.

However, it is important to note that consumers and banks must try and settle any dispute before approaching the ombudsman. Steyn says it is crucial to approach this resolution in good faith that extends to complaints brought before the ombud as it will ensure a speedy and satisfactory resolution.

“Customers are a bank’s biggest asset and therefore there is an inherent need to ensure that they are treated fairly to ensure customer retention. While banks strive to provide a perfect service and product delivery, there have been no instances where a bank has made an undertaking that mistakes will not happen. Therefore, expectations that banks are infallible would be unreasonable as human error and technological failures within the banking system will always exist.”

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Steyn shared these case studies to show how her office helps consumers:

Delays in the finalisation of a deceased estate

The complainant had to deal with the passing of his parents in 2016 and 2021 and the bank was appointed executor of the deceased estates. There was a delay in winding up the estates and the consumer wanted the bank to waive its professional executor’s fee due to its inadequate professional service.

According to the bank the delays were due to the resignations of staff members, as well as delays experienced in the Master of the High Court’s Office, which were beyond the bank’s control. The bank offered to make a 10% concession on the first estate and a 25% concession on the second estate on its fees for the delays.

“Upon investigation, we discovered that for three years after one of the bank’s staff members resigned, nothing was done on the 2016 deceased estate account. The bank also did not provide any updates on the progress of the winding up of the estate. The delays on the 2021 deceased estate were less severe as it was more recently reported to the Master of the High Court.

“We ruled that the bank’s actions were prejudicial to the complainant as there was a clear breakdown of communication and service delivery and recommended that the bank make a higher concession of 50% on the executor’s fee on the 2016 deceased estate account, to which the bank agreed.”

Failure by bank to act timeously to prevent loss

In the second case, a bank customer paid R8 758 to a fraudster’s nominated bank account, believing she was buying a food truck, but she later discovered she was defrauded and approached her bank to request a reversal of the funds. The bank advised the complainant to log a case of fraud at the bank’s fraud department, but the branch provided no further assistance.

“Fraud cases are regarded as time-sensitive by the ombudsman. However, it was uncertain why the branch did not urgently assist the complainant in contacting the bank’s fraud department to open a case of fraud. Upon investigation, it was discovered that, had the branch assisted the complainant, her funds would have been recovered as the fraudster had not withdrawn them. Therefore, we recommended that the bank offer the complainant a full refund,” says Steyn.

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Incorrect advice 

In the third case, the complainant bought a vehicle that the bank financed. He was later involved in an accident where the vehicle was written off. After claiming from insurance, he was left with a shortfall of R27 713 on his vehicle finance and he arranged with the bank to finance the shortfall. The bank informed him that interest would accumulate on the decreasing shortfall balance.

After a few months, he complained to the bank that he was overcharged and pointed out that the interest levied on the account did not correspond with the interest agreed to in the arrangement. In response, the bank said the advice given to the complainant in the arrangement was incorrect.

“Upon investigation, we pointed out that it did not matter if there was an error in the original advice given to the complainant as the bank’s failure to provide the correct advice should not be prejudicial to the complainant. Therefore, it was recommended that the bank should adhere to the terms of the original arrangement. As a result, the bank paid back R17 465.35 to the complainant following our recommendation,” says Steyn.

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How to improve your relationship with your bank

• Now, more than ever, it is important to live according to a budget. “As a family, it is important to sit down and have a frank discussion about the money available to the household after debts are paid. Family members can reach a consensus about what can be included in the budget and what needs to be cut.
• If it is financially possible, consumers should settle their debt as quickly as possible to reduce the accumulation of interest.
• If you do need to use credit to make it to the end of the month, make sure that you use a reputable credit provider.
• It is becoming increasingly difficult for consumers to service debt such as bond, car and debt repayments. Steyn points out that if families find themselves in this situation, they need to contact their bank and discuss the options available to them. “Banks offer a number of services such as restructuring debt, payment holidays and debt consolidation.”
• If you have a dispute with your bank, follow the correct procedure. Draw the dispute to the banks attention and allow them 20 days to respond to your query. Consumers can also approach the ombudsman, who will raise a dispute with their banks on their behalf.
• “Consumers must give the bank every opportunity to address and settle the dispute amicably and only approach the ombudsman to complain after the bank refuses to settle a dispute.