Banks have been made to compensate consumers, and in future the banking adjudicator will "name and shame" them for their transgressions.
Banks paid R8.7 million in compensation to consumers last year after the banking adjudicator intervened in disputes with their banks. This is almost double the amount consumers received in 1999 when the office of the banking adjudicator was established, Neville Melville, the adjudicator, says in his latest annual report.
The adjudicator's office received 13 percent more complaints in 2002 than in 2001, and 56 percent of all cases were resolved in favour of consumers, Melville says.
Last year, for the first time, rulings made by the adjudicator against banks were binding on them. Prior to 2002, all Melville's decisions were non-binding recommendations. The adjudicator can only make rulings when both the facts of the case and the law are reasonably clear.
In most of the rulings, the banks unnecessarily held out on settling the disputes until his office made a ruling, Melville says, so in future he will publish the names of the banks that have rulings made against them.
Melville says he hopes the new arrangement will encourage banks to think carefully before allowing a dispute to proceed to adjudication.
By far the biggest cause for complaint by consumers last year was maladministration (30 percent of all complaints), followed by fraud (17 percent), misrepresentation (12 percent), and negligence (11 percent).
Most complaints related to automated teller machines (ATMs). The number of complaints about ATMs last year increased by 23 percent over 2001, and 53 percent of the cases were resolved in favour of the banks.
The second-biggest category of complaints related to home loans, and 56 percent of these cases were resolved in favour of consumers.
From the banking adjudicator's case file
Wrong account number
An accountholder intended to deposit money into his account, but the funds were incorrectly deposited into another client's account, whose number differed by one digit from his own.
The depositor noticed the mistake and immediately contacted his bank. The bank maintained that it was the depositor's responsibility to complete the deposit slip correctly. The bank further relied on the disclaimer clause printed on the deposit slip.
Melville found that the teller had breached the provisions of the bank's teller procedure manual, which clearly requires that the cash amount, the account number and the client's name be verified.
Melville recommended to the bank that it carry the loss the accountholder had incurred, and that it should pay him an amount for distress and inconvenience because the matter could easily have been resolved without the adjudicator's intervention.
Changed account
A consumer opened a savings account, ostensibly for his son. No service fees were payable on the account because it was a junior savings account.
The bank became suspicious when large amounts were deposited into and withdrawn from the account, and so changed the account to an ordinary savings account and levied fees and charges for all past transactions.
The bank admitted to Melville that it had not timeously informed the consumer that it had changed the nature of the account, and therefore refunded him half the amount debited for costs.
The consumer also claimed the remaining 50 percent of the costs, and the bank settled by refunding the full amount, accepting the view that it should have informed the client of the intended action and that it was not entitled to take punitive action without following legal channels.
Stopping a cheque
A consumer issued a cheque to a contractor for work done, but later stopped payment over the internet because the work was not to his satisfaction. The bank, however, failed to stop the cheque and the contractor received the money.
The cheque had been issued on a Friday and he notified the bank to stop the cheque on the following Monday just after 2pm - within the time-frame that cheques can be stopped. The bank also gave him the assurance that the cheque had been stopped.
In its defence, the bank said it could not interfere in a dispute between the consumer and the contractor.
Melville found that the drawer of a cheque has the right to countermand payment on that cheque and that the cheque should have been stopped. He ruled that the bank had to pay the consumer the value of the cheque, as well as for the wasted costs in trying to sue the contractor and an amount for distress and inconvenience.
Supposed windfall
It is not a good idea to embark on a spending spree without being absolutely certain about the source of the funds deposited in your account.
A consumer who noticed a deposit on his credit card account tried to establish the source of the deposit, but received no explanation from the bank. As the consumer was expecting payment from clients at the time, he concluded he was entitled to the amount in question.
The bank later reversed the deposit because it had been incorrectly deposited into his account.
But the consumer had spent the money and his account was overdrawn as a result of the reversal.
Melville said the bank was entitled to reverse the transaction. To make up for the inconvenience, the bank offered to extend the consumer's credit facility, provide him with a budget facility and Voyager Miles, write off the interest and let him repay the capital over an extended period.
Deposit slip scam
A consumer sold a computer on the understanding that it would be delivered only once cash had been paid into his bank account.
A duplicate deposit slip showing a cash deposit of R10 000 was handed to him. The consumer also used an ATM to establish that the amount was reflected in his account and handed over the computer.
It turned out that a stolen cheque and not cash had been deposited into his account. The name of the drawer of the cheque appeared on the original deposit slip, but not on the duplicate.
A police investigation could find no evidence that the duplicate deposit slip had been tampered with. This led the adjudicator's office to conclude that nothing had been written in the block provided for the drawer's name. The bank did not dispute that the same teller's stamp appeared on both the original and duplicate copies of the deposit slip.
Melville ruled that the bank was liable for the R10 000 because it failed to take reasonable precautions to ensure that the duplicate deposit slip accurately reflected the amount of cash received and the drawer's name.