To the layman, the independence of an ombudsman that is funded by the industry it oversees could be called into question when one considers that 73% of cases were resolved in favour of the banks in 2021. Looking at the past three years, the split seems to be roughly 70/30, with 71.6% of cases resolved in favour of banks in 2020; 72% in favour of banks in 2019 and 74.3% in favour of banks in 2018. 

Banking ombudsman Reana Steyn says this ratio is largely in line with best international practice. 

“Our office found no legal nor fair grounds to uphold those particular complaints against the banks,” she said, but stressed that her office is guided by the facts, the law, fairness and considerations of best banking practices – national and international.

However, Steyn also noted that the complaints received by her office tend to be the more complicated, where most often consumers are victims of fraud by third parties and these cases are usually already thoroughly investigated by the banks in consultation with their legal teams to establish liability. 

“The banks don’t want to have high complaints, so they try to resolve them before I am called in. This means that the simpler complaints, the cut-and-dried cases, are usually settled by the banks in favour of consumers and don’t ever come to my office,” she says.

Consumers are required to try to resolve their complaints with the banks first, before approaching the ombudsman. However, many go straight to the ombud and are then referred back to the bank with a complaint number to see if it can be resolved within 20 days. The ombud had 10,330 referrals in 2021. If a referral is not resolved or the complainant is still unhappy, Steyn’s office opens an investigation.

“In some cases, we are able to convince the banks to make an ex-gratia payment, as a gesture of goodwill where there are extenuating circumstances or we can identify the complainant as a vulnerable consumer,” she says. 

A vulnerable consumer is defined by the ombud’s office as someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a bank is not acting with appropriate levels of care. When determining whether somebody falls into this category, considerations will include age, life events (such a death, divorce, retrenchment or victims of a crime), levels of literacy and physical disabilities. 

The banks were held 100% liable for complainants’ claims in 15.9% (1,276) of 2021’s complaints. In 4.5% (363) of these complaints, the banks were found partially liable. This means that in 1,639 (20.4%) matters adjudicated in 2021, Steyn’s office concluded that there was some wrongdoing on the part of the banks.

Complaint trends

The overwhelming majority of the complaints opened and investigated in 2021 were related to fraud. Internet banking complaints retained top spot as the highest percentage of complaints (19%). “This is an alarming 6% increase from 2020 and a worrying statistic as it goes against the progress made in 2020 where the number of internet fraud victims had dropped significantly to a record low of 13% of the total complaints,” Steyn says.  

Other complaints related to poor service, maladministration by banks, debt stress, account closures and disputed fees or interest rates on agreements.

Personal loan and mortgage finance complaints remained constant at 11% and 8% (respectively) for the past three years, while credit card complaints dropped from 11% in 2020 to 9% in 2021. There was an increase of 2% in complaints related to vehicle finance.

ATM complaints decline as tech use rises

ATM-related complaints accounted for just 7% of total complaints compared with years such as 2015 when they accounted for the most received and investigated by the ombudsman. However, consumers are increasingly choosing technology to do their banking, particularly in the past two years on the back of the Covid-19 pandemic.  

First National Bank was the only bank that saw a significant decrease (34%) in complaints. According to Steyn, this dramatic drop can largely be attributed to initiatives to ensure the bank aligns itself with the Treating Customers Fairly (TCF) principles and the requirements of the Conduct of Financial Institutions (COFI) Act. “They made a concerted effort to look past the black letter of the law in respect of the merits of a complaint, and to apply considerations of fairness and reasonableness where the facts of the particular matter allowed for such considerations. Specific attention was also given to the vulnerability of some customers and often settlements were made based on those considerations. This approach has certainly proven to be fruitful for the bank and has resulted in the reduced numbers that our office has seen.”

• Standard Bank: complaints went up 31,6% to 2,070 in 2021;
• Capitec: complaints rose 31.1% to 1,651;
• Absa: complaints grew 13.3% to 1,068; and
• Nedbank: came off a high base with an increase of 4.3% to 1,273 complaints.

Newcomer TymeBank had a whopping 870,8% increase in complaints, with 233 in 2021. However, Steyn clarifies that this is because the complaints came off a low base of just 24 in 2020. It is also logical that the number of complaints will increase as TymeBank continues to expand its customer base.

The latest figures showed that TymeBank had more than 4.5-million customers since opening its doors just more than three years ago. However, another newcomer, Discovery Bank, saw a decrease of 26,7% in complaints.

Jacques Celliers, chief executive of FNB, acknowledged the critical role the ombud plays: “While the number of complaints referred to the ombudsman accounts for a small fraction of our overall customer interactions, we take the feedback received very seriously. This is part of our commitment to putting customers’ needs first as we continue building a trusted platform business.” 

Celliers elaborated on the bank’s customer service strategy, saying feedback from customers and the ombudsman helped it calibrate processes to improve turnaround times on complaints and provide meaningful responses to all customer enquiries. BM/DM