BANKING CASE STUDIES

refund the instalments paid. It agreed. ■ Your bank is responsible for the information its consultants give you, and when you base your decisions on incorrect information, the bank can be held liable if you suffer a loss, as the following case shows.

Before the complainant completed an electronic funds transfer of R50 000 for a purchase, she asked whether the payment could be stopped. The bank advised her that the payment could be stopped within 24 hours.

After the transaction and within 24 hours of making it, she became suspicious and asked her bank to stop the payment. She was told it could not be stopped and she needed to report the matter to the police.

The bank rejected the claim because the complainant had contacted it after the transfer had been made and had reported the matter as fraudulent after the funds had been withdrawn from the beneficiary account.

The ombudsman listened to a recording of the first conversation between the complainant and the bank’s consultant. It was clear the complainant was initially given incorrect advice, which prevented her from making an informed decision on the timing for recalling the payment.

The bank agreed with the ombudsman’s recommendation that it refund the transferred amount. ■ If you fail to provide your bank with upto-date documents as required by the Financial Intelligence Centre Act (Fica), don’t be surprised if the bank freezes your account.

The complainant suffered financial and reputational loss when his trust account was frozen, in spite of having provided the bank with documentation when the account was opened.

Banks must comply with Fica and, as the documents provided were not Fica-compliant, his bank had no option but to suspend his account.

Banks are obliged to verify the details of existing customers periodically and obtain additional information if needed. Failure to do so results in massive fines on banks, such as those levied in 2014.

The ombudsman noted that while the complainant had provided the bank with the same documents used when the account was opened, Fica requires recent documents.

The hold on the complainant’s account was lifted when the bank received the correct documents. ■ If you have an account that you are not using, your bank is within its rights to close it – but it must notify you first.

The bank decided to discontinue standalone credit card accounts for individuals whose business accounts were not held with the bank.

The complainant, who had not used his credit card account for several years, was notified that failure to use it within 30 days would result in its closure. The complainant never responded to this notice and the account was closed.

The complainant submitted to the ombudsman that he had not been informed of the impending closure and that he had been prejudiced by the loss of his credit facility.

Although the bank could not prove that the customer had been informed, it was not willing to reinstate the facility. However, it agreed with the ombudsman’s recommendation tomake a “distress and inconvenience” award to the complainant. ■ If you are paying particularly low instalments on a personal loan, query it with your bank. The bank may have loaded an incorrect debit order – in which case you are probably in for a nasty shock.

The complainant was paying instalments of R1 200 a month for a personal loan of R282 000. A year down the track, she was advised that the instalment was not enough to service the interest and reduce the capital.

She would have had to pay an instalment of R4 800, which she said she couldn’t afford. The bank subsequently confirmed that it had loaded the incorrect debit order amount and offered to refund R18 000 in overcharged interest.

The fact remained that the complainant had obtained the loan. Should a customer be unable to make the repayments, the bank is entitled to approach a court to claim the outstanding balance. This could result in the recipient being liable not only for the loan, but for interest and legal fees.

The ombudsman found the bank’s decision to refund the overcharged interest was fair and reasonable.