First National Bank: you can be the cheapest bank among your peers and have the most tech-savvy offering, but if you don’t know how to treat customers fairly, you will lose them.
You have lost Ms SK, the single mother who accused you of bad advice, unfair treatment and reckless lending, and you have just lost me. Before you even got me.
Yes, you paid her back the R5 000 that you took from her, but you did it only because the Ombudsman for Banking Services told you to. And worse still, you did it without so much as a backward glance. No acknowledgment of wrong-doing and no apology.
In February, Personal Finance reported on a complaint by Ms SK, who walked into an FNB branch in search of a home loan – and walked out having signed three credit agreements: a home loan, a personal loan and a revolving credit facility.
The single mother, who derives most of her income from commission, needed R60 000 to replace the windows in a house she inherited. The old windows posed a security risk and needed to be replaced fairly urgently. When she discussed the purpose of the home loan with the bank consultant, she was told a home loan would take about three months to be processed and paid out, whereas a personal loan would be approved and accessible overnight.
So the consultant advised the customer to make use of a personal loan until the home loan was approved.
But Ms SK had already considered a personal loan and decided against it. She had worked out that the monthly repayment would be unaffordable for her.
When she told the consultant she couldn’t afford the repayments, the consultant assured her that the first repayment on the personal loan would fall due only around the time that the home loan would be paid out. And, in case of any emergencies, she suggested Ms SK take up the offer of a revolving credit facility.
The consultant’s scheme would enable Ms SK to install the new windows immediately and then use the proceeds of the home loan to pay off the personal loan, and have the overdraft just in case.
Ms SK says she asked the consultant if there was a risk that she would not qualify for the home loan, but the consultant allayed her fears.
But exactly what Ms SK feared would happen did happen. Because she had taken the personal loan and an overdraft, the home loan application was turned down on the basis of unaffordability, and she was saddled with the expensive personal loan.
Fortunately, Ms SK had not touched the R60 000 personal loan, which was paid into her account on December 3 last year. She found out in mid-January that the home loan had been declined, and paid the R60 000 back to the bank at the end of January.
The bank, however, demanded almost R5 000 from her – for interest and fees, including an initiation fee of R1 140, a service fee of R57 and credit life insurance of R177.
Ms SK took her complaint to the banking ombudsman in February, and early last month she was notified by the ombudsman’s office that FNB had written off the fees on the account and refunded her the fees and interest.
“In light of the above, it would appear that this dispute has satisfactorily been resolved. We are closing the file and have advised the bank accordingly,” said the letter from the ombudsman.
Ms SK says she’s surprised that the ombudsman made no apparent “finding” and that she never received an apology from FNB.
“FNB’s staff were very aggressive and rude to me when I complained about how I had been treated. And when I refused to pay the interest on the loan, which I never used, they threatened me with litigation,” Ms SK says.
I asked banking ombudsman Clive Pillay what his finding was and why he recommended that FNB refund Ms SK. But confidentiality provisions preclude him from discussing the case.
He says his office’s finding, together with the recommendation, is detailed in its letter to the bank. The complainant is not privy to this letter.
The only time you get sight of correspondence from the ombudsman to the bank is when the ombudsman issues a formal provisional or final recommendation, or a determination, which is binding on the bank.
When banks make payments to aggrieved consumers, they couch it in language such as “gratuitous payment” or “ex gratia”. Pillay says this practice may become more difficult in future with the Treating Customers Fairly initiative, which requires payments to be categorised either as compensatory payments (which implies fault) or goodwill payments (which does not imply fault).
The fact that FNB refunded Ms SK in full suggests that the bank has accepted that it was at fault. That being the case, I asked FNB why it did not send the customer a letter of apology. “Surely if you did, that might preserve the relationship with the customer, and why would you not want to preserve the relationship with your customer?”
I got this response from Corne Jordaan, the head of credit at FNB Loans: “FNB respects the Ombudsman for Banking Services and their independent arbitration when disputes arise. We have noted the recent decision relating to Ms SK and have implemented the ombudsman’s findings.”
This doesn’t answer the question. Clearly FNB has more regard for the ombudsman than for its customers.
Ms SK also lodged a complaint of reckless lending against FNB with the National Credit Regulator.
She says FNB didn’t do a proper affordability assessment when giving her the personal loan. Her personal loan application shows “declared expenses” of R6 000 a month. But her home loan application shows her expenses amount to R16 000 a month. Both applications were made through the same consultant.
The regulator said this week that it is waiting for feedback from FNB.