Lessons from the banking ombud
Over the past year there has been a 13-percent decline in the number of files opened by the office of the Ombudsman for Banking Services. Last year, the banking ombudsman opened 3 684 cases compared with 4 241 cases opened in 2010.
Ombudsman Clive Pillay attributes this drop off to the fact that the banks are resolving many of the simpler complaints themselves. These complaints are therefore not escalated to his office for further investigation.
Although the ombudsman’s office finds mostly in favour of the banks, there has been an increase in cases found in favour of you, the client. The ombudsman’s annual report, released this week, shows that last year his office found in favour of complainants in 47 percent of cases compared with 36 percent in the previous year.
Of all files opened last year, most complaints were in respect of Standard Bank, followed by First National Bank (FNB), Absa and Nedbank. (In terms of assets held, Standard Bank is the largest bank, followed by Absa, then FNB and Nedbank.)
The top three categories of complaints related to ATMs, mortgage finance and internet banking. In cases relating to ATMs and mortgage finance, the ombudsman found mostly in favour of the banks, but in internet banking-related cases, his office found mostly in favour of the complainants.
The ombudsman cautions users never to: click on a link in an email that appears to be internet banking-related, respond to any email that appears to be internet banking-related, or provide any information relating to your internet banking profile in response to a phone call.
“Fraudsters are now using cellphone banking platforms to access accounts, and users must ensure that they do not provide any information to anyone calling or sending them SMS messages regarding cellphone banking log-on information,” Pillay says.
Leanne Jackson, the head of Treating Customers Fairly at the Financial Services Board, commended Pillay and his team for their “excellent work”. Offices such as the Ombudsman for Banking Services are there to ensure “ultimate fairness” when a customer is let down by a financial system, she says.
The following case studies in Pillay’s annual report show how his office is working for you.
Hook, link and sinker
The complainant admitted to responding to a phishing email and entering his personal log-on details on a false website. The bank initially disputed any liability for the loss.
During investigation by the ombudsman’s office, however, it came to light that the complainant had contacted the bank immediately after receiving the fraudulent email, which purported to be from the bank. The consultant not only advised him that the email was legitimate, but helped him respond to it.
The bank clearly was negligent and should have advised the complainant not to respond to the email. The bank accepted the ombudsman’s suggestion that the R34 671 loss be refunded in full.
A lifeline from Fica
The complainant responded to a fraudulent email that appeared to be from the bank. By clicking on the link in the email he accessed a false banking website and entered his confidential password information.
The fraudster then logged onto the genuine website of the complainant’s bank and transferred R452 600 from his account to accounts held with various banks.
The bank managed to freeze R82 586 that had not yet been withdrawn from the complainant’s account. However, it denied responsibility for that which was lost, as its systems had not been hacked into or compromised in any way. The bank provided evidence that the one-time password (OTP) used to create the beneficiary accounts was sent to the complainant and must have been entered on the false website.
The most common way for fraudsters to get your OTP is if they steal your SIM card and swap it with another. But increasingly fraudsters trigger the generation of an OTP by viewing the customer’s log-on details on the fraudulent website.
While there was no evidence that the bank was responsible for the fraudster accessing the complainant’s account, it had failed to suspend some of the fraudulent accounts within a reasonable time, the ombudsman said. His office expects the banks to place a hold on all accounts, including beneficiary accounts, within one hour of being alerted to fraudulent activity.
Further, some of the fraudulent accounts used were not opened in accordance with the Financial Intelligence Centre Act (Fica). For example, a bank must obtain the minimum required opening documents and must not allow withdrawals in excess of the maximum daily limit.
The bank accepted the ombudsman’s suggestion that it refund the complainant R243 052.
Getting out of a fix
The complainant had four bond accounts. During June 2009, she asked the bank to change the interest rates on the accounts from fixed to variable, as she was struggling to meet her bond repayments. In 2011, the bank eventually changed her rates to variable. The complainant maintained that the process was unreasonably delayed, which caused her bond to fall further in arrears.
An investigation by the ombudsman found that the consultant who helped the complainant didn’t advise her on the process to follow when applying for the change. The bank was advised to refund the difference between the fixed rates and the variable rates from the time the application was lodged in 2009 until it was granted. The bank agreed.
Joint bond blues
During a couple’s divorce, the bank allowed the wife to make three withdrawals amounting to R75 800 from the joint bond account without the complainant’s consent. The complainant did not receive any benefit from the funds and the withdrawals were made contrary to the mandate held by the bank.
The ombudsman recommended that the bank credit the bond account with the funds withdrawn, and the matter was resolved in 2009.
During 2011, the complainant lodged another complaint. He had settled the bond account and was transferring the property to his ex-wife in terms of the divorce order. The bank, however, had again debited the bond account with R75 800 on the basis that it was entitled to claim this money from the ex-wife.
The ombudsman deemed the bank unreasonable in holding the complainant liable for half the debt, which contradicted the earlier recommendation. The bank agreed to credit the bond and allow transfer to the ex-wife. It could then claim from her, using the property as security.
The Ombudsman for Banking Services is Clive Pillay.
Sharecall: 0860 800 900
Telephone: 011 712 1800. Fax: 011 483 3212
Post: PO Box 5728, Johannesburg, 2000