FNB the only major bank to buck trend of higher complaints

First National Bank (FNB) was the only bank among the country’s “big five” banks that recorded a decrease in the number of cases opened against it by the Ombudsman for Banking Services (OBS) in 2021.

Both Standard Bank and Capitec saw the number of formal cases opened against them increase by more than 30% last year, according to the OBS’s annual report for 2021.

After a 36.4% decrease in the number cases opened against it in 2020, Absa experienced a 13.3% increase last year.

TymeBank saw a huge increase, 870.8%, in the number of complaints logged in 2021. However, these complaints came off a very low base of only 24 in 2020, compared to 233 in 2021.

Reana Steyn, the ombudsman, pointed out that when comparing the number of cases opened against the banks, it should be kept in mind that the banks vary in size, client profile and product mix.

With this in mind, the table below provides estimates of some of the banks’ number of customers, based on their own reports. However, the banks do not report their customer numbers uniformly – for example, some include non-South African clients.

FNB praised for applying TCF principles

Steyn said the 34% decrease in the number of cases opened against FNB could largely be attributed to the initiatives implemented by the bank’s chief executive and staff to ensure that the bank aligns itself with the Treating Customers Fairly (TCF) principles.

FNB made a concerted effort to look past the letter of the law in respect of the merits of a complaint and to apply considerations of fairness and reasonableness where the facts of the particular matter allowed for such considerations, she said.

Specific attention was also given to the vulnerability of some customers, and settlements were often made based on those considerations, Steyn said.

Overall increase in complaints

The number of complaints opened against the country’s banks increased by 6.9% last year, compared with the 19.2% increase from 2019 to 2020.

The OBS opened 8 257 cases last year, compared with 7 720 in 2020 and 6 472 in 2019.

Steyn said although there was an increase in complaints in 2021, it should be taken into account that banks were dealing with “a highly disruptive and challenging environment”.

The number of cases finalised by the OBS in 2021 increased by 9%, from 7 230 in 2020 to 8 039.

However, 72.7% of those 8 039 finalised cases were in favour of the banks – in other words, the OBS found there was no legal or fair grounds to uphold the complaint.

The banks were found fully liable for only 15.9% of complaints and partially liable for 4.5% of complaints.

“Of the matters concluded in favour of the complainants, over R19 400 000 was awarded and offered because of the OBS’s direct intervention,” said Steyn.

More than 10 330 complaints were referred to the banks in 2021 compared to 8 389 in 2020.

Referrals are complaints received by the OBS from consumers who have not provided their banks with an opportunity to resolve the complaint with them in an amicable manner.

The OBS sends these complaints to the banks so that they can attempt to resolve the matter directly with the consumer. The matter is converted into a formal case only if the problem cannot be resolved by the bank, said Steyn.

‘Worrying’ increase in internet-related complaints

Complaints related to internet banking reclaimed their pole position as the category with the most complaints in 2021, accounting for 19% of the total complaints opened.

Steyn said this was “a worrying” six-percentage point increase from 2020, because it went against the progress made in 2020, when the number of internet fraud victims dropped significantly to a record a low of 13% of the total complaints.

Of the internet banking complaints, 45% were brought against Capitec and 20% against Standard Bank.

Phishing constituted 41% of complaints in this category, while 25% related to mobile banking.

Current account complaints accounted for 16% of total cases opened, a decrease of three percentage points from 2020.

Of these, 44% were service-related complaints, 40% were fraud related, 14% were due to some sort of maladministration on the part of the bank, and 2% came from debt-stressed complainants.

Personal loan and mortgage finance complaints remained constant at 11% and 8%, respectively, for the past three years, while credit card complaints declined from 11% in 2020 to 9% in 2021.

There was an increase of two percentage points, to 8%, in the number of complaints opened relating to vehicle finance.

ATM-related complaints continued to decline, with the total number of complaints opened accounting for 7%. This was a two-percentage point decrease from 2020 and a further six percentage point decrease from 2019.

Steyn pointed out that in previous years, such as 2015, ATM-related complaints constituted the largest number of complaints that were received and investigated by the OBS. However, as a result of consumers choosing technology to do their banking, internet banking has taken over.

She said that with most of these complaints, consumers could have avoided the losses and the inconvenience if they had been more sceptical of fraudsters posing as bank personnel.

The OBS’s financial statements

The OBS received fees of R32.1 million from its member banks last year, 3.5% more compared to 2020.

Administrative expenses came to R1.3m, most of which went on total remuneration of R821 573 (2020: R756 235) to the OBS’s seven directors and prescribed officers. “Other expenses” came to R29.5m (2020: R28.6m), most of which, R24.4m, was to pay salaries.

Profit from operating activities increased from R1.06m to R1.35m, while total profit, which included interest income of R847 645, rose from R2.1m to R2.2m.

At the end of December last year, the OBS had retained income of R6.74m, which was 48.5% higher than the R4.53m at 31 December 2020.