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SA banks’ own financial shenanigans don’t reflect too well on their reputations

The Ombudsman for Banking Services reported a record number of complaints received and investigated concerning issues of fraud, maladministration by banks, closure of bank accounts and repossessions. File Picture: Mike Hutchings

The Ombudsman for Banking Services reported a record number of complaints received and investigated concerning issues of fraud, maladministration by banks, closure of bank accounts and repossessions. File Picture: Mike Hutchings

Published Jun 14, 2022

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Cape Town - When it comes to reputational risk, it would appear some South African banks have recently been caught up in financial shenanigans that do not reflect too well on their reputations.

This is reflected in the latest Ombudsman for Banking Services (OBS) Annual Report which has noted numerous disputes between customers and the banks.

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Apart from showing a marked increase in complaints against banks across all complaint categories, the report showed that the banks needed to examine their own reputations and the inherent risk a questionable reputation presents to their operations.

The report, released on May 11, noted that 2021 was the first full year when the OBS collated the statistics in respect of vulnerable consumers. At least 70% of vulnerable consumers were classified as such due to age, while 22% were classified as vulnerable due to a life event such as retrenchment or the death of a spouse/partner.

The report said: “A very concerning statistic is the 5% of vulnerable consumers who were over 85 years of age, and the 22% who were between 75 and 85.”

Banking commentator Corrie Kruger, himself a former banker, said banks liked to portray themselves as having very high moral standards.

“They want to be seen as having very high standards of ethical behaviour and have an attitude of ‘we’re untouchable’.”

In trying to hold banks accountable, Sekunjalo Investment Holdings chairman Dr Iqbal Survé had on numerous occasions called on South Africans who have fallen victim to exorbitant interest rates charged by the lenders, and who were suffering because of the repossession of their properties by banks, to join a class-action suit led by Gardee Godrich Attorneys.

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More than 6 000 people joined the proceedings instituted by him and 42 others at the Western Cape Equality Court.

Ombudsman for Banking Services, Reana Steyn, said a record number of complaints were received and investigated concerning issues of fraud, maladministration by banks, and a growing number of bank account closures (by the banks) and bank repossessions.

Steyn said her office opened a record 8 257 complaints during the reported period. This was a 7% spike from 2020 and a 28% increase from the number of cases opened in 2019.

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Steyn said: “The OBS sends these complaints to the banks, on behalf of the consumers, for the banks to attempt to resolve the matters directly with consumers. The matter is only converted into a formal case if the problem cannot be resolved by the bank.”

The OBS Report said Standard Bank had an increase of 31.6% in complaints, with a total number increasing from 1 572 logged in 2020 to 2 070 last year. Steyn said many of the complaints opened and investigated by her office last year involved instances where bank customers became victims of fraud.

The OBS also dealt with many service-related complaints, maladministration by banks, consumers being debt stressed, account closures by banks and consumers disputing fees or interest rates.

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Nedbank accounted for 1 273 of the cases opened, which the OBS said was an increase of 4.3%, while complaints against Discovery Bank fell by 26.7%. The report said that though in 2020 Absa Bank recorded a reduction in the number of complaints, down 36% year-on-year, last year was the opposite.

The bank went from 943 cases in 2020 to 1 068 cases last year, a 13.3% increase. FNB recorded a decrease in cases from 2 197 complaints in 2020 to 1 452 last year.

FNB CEO Jacques Celliers said: “We take the feedback received from the OBS very seriously. We are always willing to listen and assist customers in any way we can, with the Ombud serving as the last resort in dispute resolution.”

In trying to hold banks accountable, Sekunjalo Investment Holdings (SIH) chairman Dr Iqbal Survé had on numerous occasions called on South Africans who have fallen victim to exorbitant interest rates charged by the country’s financial institutions, and who are suffering because of the repossession of their properties by banks, to join his class-action suit led by Gardee Godrich Attorneys.

At the time he made the call, more than 6 000 people joined the proceedings instituted by him and 42 others at the Western Cape Equality Court.

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