Formal cases reported to the Ombudsman for Banking Services (OBS) increased by 12% to 8 521and referrals (now called premature complaints) increased by 11% to 13 373.
This information is contained in the 2023 Annual Report for the Ombudsman for Banking Services (OBS).
The report was released by former Banking Ombudsman Reana Steyn. Steyn, who started her journey with the OBS in 2017 as the first woman to hold the position of Banking Ombudsman in the organisation, was recently appointed as the first head of the newly formed National Financial Ombud Scheme South Africa (NFO).
“In the year under review, one of our top priorities has been the amalgamation of the four voluntary schemes – ourselves, the Long-term Insurance Ombudsman, Credit Ombud and Short-term Insurance Ombudsman – into a single new entity,” said Steyn.
“The important work of the Banking Ombudsman in helping to maintain the health of South Africa’s banking system continues to be our driving force.”
Steyn said the total record number of cases opened by the OBS totalled 21 641, an increase on the 2022 figures of 11%.
She said the number of cases closed by the OBS in 2023 increased by 6% from 2022, with a total of R25 735 594.17 being recovered for consumers in the year under review.
“Just as impressive is the 26% increase in calls handled by the Call Centre, a vital link in the customer service chain, to 60 030 calls, as opposed to 47 819 in 2022. Additional resources (staff and technology) were employed to deal with the increased workload at every level.”
“The categories of complaints that kept us most busy were current accounts, personal loans, savings accounts, credit cards and home loans, in that order. We continue to identify certain complainants as ‘vulnerable consumers’ of which we had 199 and had numerous successes when we brought these facts to the attention of banks. We will continue to improve, refine and expand this concept.”
The Top 5 Sub-categories of Vulnerable Consumers were:
Age: 65 – 75: 30% ; 75 – 85: 35% ; Age 85+: 9%
Life Event: Retrenchment: 9%; death of life partner/spouse 9%
A vulnerable consumer is defined as “someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care”.
How South Africa’s banks fared
Steyn said it was pertinent to note that 2023 marked the highest number of complaints ever received by the organisation.
“While complaint statistics provide valuable insights, it’s crucial to interpret them within the broader context of each bank’s operational landscape and their initiatives in consumer education – specifically, how effectively they inform customers about the Ombudsman for Banking Services and the complaint procedures,” Steyn explained.
“The relatively low number of complaints received by the OBS, is indicative of the South African banking sector’s commitment to transparency, regulatory compliance, and customer satisfaction.”
“Various factors such as the size of the bank’s customer base, play a significant role; larger banks naturally handle more transactions and interact with a broader spectrum of clients, which can result in a higher volume of complaints, simply due to their scale. Similarly, the growth trends within a bank’s customer base and the overall volume of daily banking transactions also influence complaint frequencies.”
She said in formal cases the following increases were shown year on year by the banks:
FNB had a 15.1% increase in complaints year on year; Capitec followed with a 12.4% increase, while Nedbank, despite having the second-highest number of complaints, only had a 3.6% increase. The number of Absa complaints decreased by 8%, while Standard Bank’s number of complaints decreased by 5.3%.
“An indicator of how well banks handle complaints is their conversion rate of premature cases to formal complaints. According to the report, African Bank saw 79% of referrals being converted to formal complaints, followed by Bidvest Bank at 67%, Capitec and Nedbank both at 64% and Tyme Bank at 63%. FNB converted 37%.
“The bank with the quickest turnaround time (referring to the number of days it took to close complaints, on average) was FNB at 74 days, while Discovery Bank, who has a lot less cases than some of the bigger banks on average, came in at 89 days,” she said.
According to Steyn, the highest percentage of cases being decided in its favour was Tyme Bank at 87%, while African Bank had the lowest (62% in its favour). It should be noted here, that of the banks with the most cases Capitec did best in this section at 82%, followed by FNB at 77%
She said in the category of Estates and Trusts, 49% of cases were resolved in favour of the complainant. Additionally, the highest category of complaints within the current account category, digital banking saw the highest number of complaints. This underscores that fraud, particularly internet banking fraud, phishing, vishing, and push payment fraud, remains our top category of complaints.
“In line with the OBS strategic plans, a renewed focus for the Communications department in 2023 was to effect communications that went beyond the simple distribution of information regarding the work of the OBS. Consumer education was also ramped up to ensure that consumers felt supported and empowered throughout the ‘complaint resolution process’ and were aware of their rights. This was achieved by increased marketing, and using clear and accessible communication on different channels,” she said.
According to Steyn, through press releases and newspaper articles, the OBS aimed to simplify rather complex banking procedures, ensuring that the banking public were equipped with the knowledge to exercise their rights effectively.
“While targeted awareness campaigns, interviews, and collaborative outreach initiatives were instrumental in arming thousands of consumers with the necessary tools to identify and hopefully prevent fraudulent activities on their bank accounts, thus contributing to a safer financial environment for all and engendering more trust in financial institutions,” she said.
* Maleke is the editor for Personal Finance.
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