The banking Ombudsman has released its annual report, revealing which South African bank drew the most customer complaints in 2016.
According to the ombud there were a total of 5,219 cases opened against 17 different banks, over 74% of which were officially closed during the calendar year.
The majority of complaints (over 50%) were fraud related in some way. In these complaints, the complainant is overwhelmingly the victim of a scam. There is no maladministration on the part of the bank, according to the report.
Similarly, with debt-stressed complainants, the ombud found that there wass also no maladministration on the part of the bank, and complainants are simply looking to their banks to ameliorate their debt repayment obligations.
Most complained-about bank
As the biggest bank in South Africa by number of clients, it stands to reason that Standard Bank drew the most complaints during the year. However, when looking at the complaints as a portion of its banking clients, Standard Bank still takes the top spot.
Standard Bank boasted 11.8 million customers in December 2016, up from 11.6 million the previous year. More interesting is that the country’s second biggest bank (8.8 million clients) was only the 4th most complained about bank finishing behind both FNB (7.7 million) and Capitec (8.3 million).
How many complaints are resolved?
There was a slight drop in the number of cases found in favour of complainants for the year under review.
In the majority of cases (75.8%), the ombud found in favour of the bank, compared to 16.6% that were held in favour of the client, while just 0.2 withdrew their complaints completely.
In 2016 the ombud received 205 more internet banking complaints than in 2015. Interestingly, the majority of the internet banking complaints were related to cellphone banking, which increased by 7%. This suggests increased cellphone banking activity, but also a need for greater security, said the report.
There was also a 3% increase in credit card complaints. A staggering 36% of all credit card disputes were charge back disputes, where some element of fraud was alleged. This equates to a 16% increase year on year for this subcategory.
A total 3 495 cases of consumer complaints were opened at the Consumer Goods & Services Ombud (CGSO) between March 2015 – February 2016, with the top five complaints relating to cellphones (951), services (795), furniture (523) electrical appliances (343) and computer accessories (140).
It should be noted that the organisation also received a staggering 14 599 calls from disgruntled consumers during that same period. While not all consumer complaints do become a liability issue, it is important that all South African businesses understand the consumer protection framework and what types of complaints can progress into legal liability claims.
This is according to Simon Colman, executive head at SHA Specialist Underwriters, who says for many years in SA, consumers had no efficient way of pursuing recourse against businesses if they felt they had been treated unfairly.
“The court processes are complex, expensive and in the end do not really service the average ‘man in the street’ who is often without financial and legal resources. The implementation of the Consumer Protection Act (CPA) changed all this because this piece of legislation dictates how consumers must be treated with regards the supply of goods and services in SA.”
He says the Act serves a noble purpose, protecting consumers and also providing businesses with a blueprint to good customer service. “However, any piece of legislation is useless without good enforcement. The National Consumer Commission (NCC), the Tribunal and the various alternative dispute resolution forums are all set up to provide a levelled playing field between businesses and their customers.”
Colman explains that typically a consumer lodges a complaint initially with the retailer or supplier of product/service and the normal complaints handling process between the retailer and the consumers then takes its course.
“Most complaints are actually resolved at this level but those that are not are then referred either to the NCC or to a recognised industry body if one exists.”
“The NCC is a statutory body that is responsible for overall regulation of the consumer environment whilst the CGSO is a recognised alternative dispute resolution forum, empowered by the NCC to resolve disputes. Once the ombud has ruled on an issue at the CGSO, disgruntled consumers can still approach the NCC if they are unhappy with the outcome,” states Colman.
Not every industry subscribes to the CGSO as participation is voluntary and involves the payment of subscription fees, he says. “A business that is not a member will by default either fall under the NCC’s jurisdiction or under some other more specific industry body if one exists, for example the motor industry has its disputes heard by the Motor Industry Ombudsman.”
Looking at the disputes that went before the CGSO last year 43% were related to goods whilst 29% related to services and 21% to allegedly unfair agreements/contracts, he says. “Not all of these complaints would result in a liability claim under an insurance policy. A product liability insurance policy generally responds to third party claims after there has been some form of injury or damage caused by the product/service.
“Many of the complaints that are lodged at the various dispute forums relate to some kind of failure or defect in the product/service but do not necessarily cause any injury or damage. In those instances the consumer is often simply seeking a replacement or a refund and that would not generally be an insurable claim, especially not under a product liability insurance policy.”
He points to an example in the CGSO report where a lady alleged that a defect in sandals she bought caused her to fall and injure herself. “Due to the fact that there is an allegation of an injury being caused by a product that would be what we would call an indemnifiable (covered) event. If the supplier had a product liability policy in place and it was alleged that the sandals caused the injury, the defense costs and the damages may have been covered by insurance. Contrarily, if the consumer simply claimed for a new pair of sandals because the others were of poor quality and there was no injury or damage caused by the product supplied, that would not be a claim under the policy.”
The NCC and the various dispute resolution bodies that deal with these matters can assist in bringing about the resolution of a dispute but they do not ‘side’ with the consumer as this would be unfair, he says. “They do of course investigate the complaints to check if the consumer has grounds for protection under the CPA. Businesses that blatantly flout the law can face stiff penalties (up to 10% of their annual turnover) so it is in their interests to participate in the process and to comply with the requirements of the CPA.”
“The CGSO creates an easily accessible platform so that consumers can ‘have their say’ without having to incur the costly legal expenses associated with actually approaching the courts. The time taken to resolve a dispute is generally much shorter in the CGSO (57 days on average) than in the High Court where it can take over a year to get resolved,” Colman concludes.