Rise in complaints against banks, ombud report shows

The issues the OBS dealt with included complaints of fraud, maladministration by banks, closure of bank accounts and repossessions.

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Published Aug 10, 2022

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Durban - The Ombudsman for Banking Services (OBS) 2021 annual report revealed that it had seen a 7% increase in the number of complaints opened compared with the previous year.

The issues the OBS dealt with included complaints of fraud, maladministration by banks, closure of bank accounts and repossessions.

Reana Steyn, the Ombudsman for Banking Services, said: “Continuing the trend from previous years, 2021 was no different, with many of the complaints received and resolved by the OBS relating to fraud, maladministration by banks, closure of bank accounts and repossessions. The OBS opened a record 8 257 complaints during the reported period. This was a 7% increase from 2020 and a 28% increase from the number of cases opened in 2019.”

One of the most serious cases in the report deals with a complaint where the complainant died before the matter could be resolved, and related to a vehicle being attached and sold by a bank incorrectly in 2016.

The report said the man was left with an outstanding balance he had to pay, despite no longer having the vehicle.

“In this instance, not only did the bank wrongly take judgment against the complainant, it took the bank years to acknowledge their mistake,” it read.

The report found the complainant had suffered a severe injustice.

“While the matter was being investigated by our office, the complainant passed away. The bank sent a communication confirming his demise and requested us to close our file. In light of the complainant’s passing, we could no longer consider the complaint and had to close the file,” it read.

The Ombud, however, said the complainant’s estate had a claim against the bank and the executor of the estate would have to lodge a dispute with the Ombud’s office.

“We were, however, of the view that the bank had a responsibility to contact the executor and settle the matter with the complainant’s estate,” the report read. The Ombud recommended to the bank that it remedy the situation.

“We advised the bank that, had we proceeded with the matter, our recommendation to the bank would have been as follows: The bank would not have placed the complainant in the position he would have been in, had the bank not incorrectly taken judgment. We would have therefore proposed the following solution: That the bank find a suitable replacement vehicle to the same value as the outstanding balance, and reinstate the credit agreement prior to the judgment having been taken; or, the bank should obtain an expert opinion on the value of the vehicle prior to the sale and determine if the value was more or equivalent to the outstanding balance and adjust the balance according to the actual value of the vehicle,” it read.

The Ombud suggested that in addition, the bank should “rescind the judgment at its own cost, and further, in light of the severity of the bank’s actions and the consequences suffered by the complainant (six years passed before the bank acknowledged the error and agreed to rescind the judgment), we are of the view that an award of R20 000 for the distress and inconvenience suffered should be considered”.

The report said the bank accepted the recommendation and R20 000 was paid into the deceased’s estate last account. The bank wrote off the amount from the outstanding balance.

Financial investigating consultant Emerald van Zyl said there was a lack of political willpower to deal with the country’s banks, who were blatantly discriminating against clients.

“In 2007, I gave testimony at the (SA) Human Rights Commission on evictions and stated that consumer protection in the country had collapsed,” he said.

Van Zyl said in many cases banks increased the interest rates they were charging defaulting clients. “This is illegal. In one of my cases, the client was paying 9.25% interest, but when he defaulted the interest rate went up to 18%.” He said banks used “risk” to force clients into a corner.

“When it comes to motor vehicle loans, there is discrimination. Some black clients pay prime plus 8%, and the banks say what defines the interest rate is the credit rating and affordability. But the law is clear that the instalment cannot be more than 30% of your salary. Why are certain people charged an interest rate of 11% and others 18% on their vehicles?” Van Zyl asked.

THE MERCURY

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