Ombud braces for fallout of disputes from Covid-19

GEORGINA CROUTH georgina.crouth@inl.co.za

UNJUSTIFIABLE enrichment after funds were transferred to the wrong account, a house sold in execution for a mere R1 000, a bank’s failure to mitigate a customer’s loss after ATM fraud while abroad, and a customer’s account unlocked after online fraud.

This was despite the fraudster repeatedly failing to answer basic security questions over the phone, prompting the consultant to ask her “Who is telling you the answers?” and “Whose account is this?”

These are some of the most striking case studies listed in the annual report of the Ombudsman for Banking Services, released digitally for the first time, at the end of last week.

The report shows that during 2019 the ombudsman opened 6 472 formal cases and closed 6 333 cases, compared with 7 115 opened and 7 307 closed in 2018.

Although the financial impact of the Covid-19 crisis is not yet known, ombudsman Reana Steyn expects the fallout to be reflected in the next reporting period, as her office’s services are likely to be in far greater demand.

The ombud said there was a significant decrease in the number of referrals recorded in 2019, when it referred 4 709 complaints to banks compared with the 6 309 case referrals in the year before, and 7 173 referrals in 2017.

“This could indicate that more banking clients understand that they have to first report any dispute or complaint to their bank(for resolution) before they approach our office for assistance,” Steyn said.

Internet banking complaints accounted for 18% of total complaints received in 2019, which was a 4% decrease from 2018.

A total of 1 292 internet banking cases were closed last year: 947 (73%) of these complaints were resolved in favour of the banks, and 345 (23%) in favour of customers. As in previous years, the complaints related to fraud.

Steyn said vishing, phishing and smishing, fraudulent SIM swops are “still just as prevalent, and some unsuspecting banking clients are still conned into unwittingly providing fraudsters with their personal banking details”, calling for continued consumer education and awareness around the issue.

Credit card complaints were second on the list, increasing from 12% in 2018 to 15% of total complaints last year.

The office closed 904 credit card-related complaints – 214

(24%) of those were in favour of bank customers. Two of the most prevalent issues related to card fraud and chargeback disputes due to online trading.

ATM complaints accounted for 821 (13%) cases opened in 2019, which is down by 1% from 2018 (14%) – also related to fraud. Eightyfour percent (or 694) cases were resolved in favour of the banks and the ombud said her adjudicators needed to satisfy themselves that the customer had compromised their card and PIN, through no fault of the bank.

Accounting for 12% of the total complaints tally, there were 649 current account complaints last year – a slight increase from 10% the previous year. Sixty-five percent or 445 of these complaints were upheld in favour of the banks.

Personal loan complaints remained stable at 11% in both

2018 and 2019, accounting for 666 complaints this year, mortgage loan finance for 490 (8%, 10% in 2018), vehicle finance for 462 (8%, 8% in 2018).

Debit order complaints were also the same as the previous year, accounting for 190 (3%) of cases received. Here, 48% of complaints found in favour of customers.

Steyn said the top three complaints for consumers under the age of 31 related to ATM fraud, internet banking fraud and car finance, while the top three complaints for millennials related to personal loans, internet banking and ATM (40 related to personal loans, internet banking and ATM fraud, respectively).

But alarmingly, about 64.58% of complaints were from older consumers over the age of 40, with the majority relating to internet banking, credit card and ATM fraud.