Consumers should put pressure on their banks if they are unhappy about services or charges, Neville Melville, the Ombudsman for Banking Services, said this week when addressing the Cape Town Press Club.
Melville was responding to a question about why consumers in South Africa are so angry with their banks.
Melville says part of the problem is that there is a perception among South Africans that they are not getting value for money from their banks. Another problem is the lack of a strong consumer lobby.
Consumer lobby groups in the United States have been successful in bringing about a change in the way that banks do business in that country, he said.
When pressure is brought to bear, changes do take place, he said.
The banks recently launched the low-cost Mzanzi account after the government put pressure on the banking industry to cater for low-income earners, for whom bank accounts were not cost-effective.
The largest number of complaints to the ombudsman concerns mortgage finance, Melville said this week.
Given the property boom in South Africa, it is no surprise that this category of complaint has displaced ATM complaints as the top issue among customers, he says.
In January this year, mortgage finance accounted for 24 percent of all complaints received over the past year, and 18 percent of complaints concerned ATM banking.
Melville cautioned clients to be careful not to borrow more than they can afford when taking out a homeloan. He predicted that in a year or two, his office would receive complaints from consumers who have borrowed more than they should have to buy a second property. He expects the banks will repossess these properties because the buyers will have been unable to lease their properties due to a glut in the letting market.
Another issue of concern is life assurance for mortgage holders, Melville said, as consumers often mistakenly believed this was in place, only to discover it was not after the family breadwinner died.
On the subject of internet banking, Melville said complaints about internet banking had dwindled to just about nothing.
Since the case of an Absa client who lost money in an internet banking transaction a few years ago, banks had beefed up their security systems and procedures considerably.
These days, for instance, it is no longer possible to open a bank account online. Some of the procedures imposed by banks have made internet banking less user-friendly for clients, but have resulted in greater security.
Responding to a question on whether banks should be made to pay for their errors, since they are so quick to charge clients who make errors, Melville said his office encouraged banks to be more creative in the way they made good to clients.
But sometimes banks prefer to pay a penalty rather than tender an apology to a client. A few years ago, a bank (which Melville did not name) paid a client R10 000 for distress and inconvenience rather than apologise to the client.
The office of the Ombudsman for Banking Services was set up to help clients resolve complaints quickly and cost effectively.
It does not cost you anything to take a complaint to the ombudsman.
After reviewing a case, the ombudsman can make one of two decisions. He can recommend how a dispute should be resolved, however his recommendation is not binding on a banks.
Or, he can make a determination, which can be made an order of court, if necessary.
The banks that voluntarily subscribe to the ombudsman's scheme, agree to abide by his determinations.
The ombudsman can order a bank to compensate consumers for actual losses incurred, plus interest. He can also make financial awards for distress and inconvenience.
The ombudsman's office receives about 14 000 inquiries from the public in a year, of which about 3 000 are classified as disputes. On average about 54 percent of the 3 000 disputes are resolved in favour of consumers, Melville says.
In 2003, intervention in disputes by the ombudsman put R12 million back into the pockets of consumers and last year R14 million was repaid by banks to consumers.
Melville said the number of complaints was an area of concern, considering the number of complaints handled by the ombudsman in the United Kingdom, however, the banks in South Africa were moving in the right direction.
The Ombudsman for Banking Services is Neville Melville.
Share call: 0860 800 900
Telephone: (011) 838 0035
Fax: (011) 838 0043
Postal address: PO Box 5728, Johannesburg, 2000
Email: info@obssa.co.za