The country's banks got a tongue-lashing from the Banking Adjudicator in his latest report. However, not all their clients are innocent victims.
Neville Melville, the Banking Adjudicator, says he is concerned that while banks contribute towards many noble enterprises, such as social upliftment, sport, culture and the environment, they are reluctant to share in the losses incurred during hard times by their long-standing customers from whom they have made profits.
Banks often view complaints from consumers as a nuisance rather than an opportunity to rectify problems, and consumers are frequently more aggrieved at the manner in which their complaints are treated than they are about the complaint itself.
From the consumers' perspective the banks:
* Do not deal with complaints at the appropriate level;
* Disregard simple requests for timeous information;
* Fail to provide understandable explanations;
* Brush aside complaints with statements such as "it is bank policy" or without even giving an explanation;
* Make no effort to find out the real cause of the complaints;
* Hand matters to lawyers for recovery action without acting fairly; and
* Fail to admit when they are wrong or offer an apology.
On the other hand, consumers have not always been the victims. The adjudicator has received complaints from consumers who are suspected of either abusing the adjudication process or trying to fraudulently claim money from the banks.
Other consumers do not understand what the adjudicator can or is able to do.
Both consumers and the banks have attempted to influence the outcome of complaints.
Melville says his office has had to dismiss the complaints of several people who were rude and abusive. While he is sympathetic to the traumatic experiences to which they may have been subjected, Melville says perhaps they bring trouble upon themselves through their bad attitude towards other people.
The total number of complaints received by the Banking Adjudicator's Office during last year was 2 561, which is up from the 1 922 complaints received in eight months in 1999.
Of the cases resolved by the adjudicator in the past year, 34 percent were resolved in favour of consumers, 42 percent in favour of the banks and 24 percent were not investigated.
ATM problems
Melville says his office undertook extensive research and liaised with the chief executives of the banks about complaints arising from the use of automatic teller machines (ATMs).
The result is that under the Code of Banking Practice, banks now accept liability for losses at ATMs unless they can prove that consumers were acting fraudulently or were grossly negligent.
In the past, the general approach of the banks was that you had contractually agreed that you would be liable for losses should you compromise your personal identity numbers (PINs). The banks were therefore not prepared to accept any losses arising from ATM crime.
Melville points out that the Code of Banking Practice requires consumers to exercise caution when using ATMs, and his office has recommended that consumers bear a percentage of their loss themselves because they contributed to the loss by being careless.
Risk
While banks undertake to explain how your accounts function when you open a new account, of concern is that there is no undertaking on the part of the banks to explain or inform you of the risks attached to particular types of accounts, Melville says.
In several cases, account holders have had their accounts cleared out by fraudsters, who had withdrawn additional funds for which the account holders did not have overdraft facilities. The banks then tried to hold the account holders liable for the entire loss, although the account holders were not aware that they carried a risk of such magnitude.
The explanation by some banks was that if they were to publicly explain the risks, more people would try pulling off similar fraudulent schemes.
Melville says this explanation does not hold water because being better informed can help you avoid risk.
Confidentiality
Under the Banking Code, if you do not explicitly withhold your consent, you are presumed to have agreed to allow the banks to share your personal information with third parties.
But Melville says it would be better if your information is not shared unless you expressly give your permission.
A typical scenario is that a person who has received a lump sum payment is persuaded to invest it at a higher interest rate - and at higher risk - by a broker who has contacted the person after obtaining his or her confidential financial information from a bank.
Home loans
Complaints relating to home loans - 18 percent of complaints - are still the largest category of complaints dealt with by the Adjudicator's office.
Issues that arose included the banks' valuation - or lack thereof - of a property by their property assessors, failure by the banks to ensure that the property is insured and the banks' practice of routinely increasing insurance cover. Of the 495 complaints received about home loans, 65 percent were resolved in favour of the banks.
Contact the banking adjudicator
Telephone: (011) 838 0035
Fax: (011) 838 0043