"Help! The bank keeps saying I owe more"

Mbongeni Mguni | Friday February 7, 2014 13:52

 

BusinessWeek: Your data shows that 26% of complaints received last year were about personal loans, followed by ATMs, mortgages, unauthorised debits and fund transfers. What are the challenges with personal loans?

Maotwanyane: Let me explain that all complaints are assessed when they come in. If we discover that the complaint has not undergone the bank’s Internal Complaints Procedure we refer them to the bank. Basically what we need to be assessing is the dispute in question, i.e the disagreement between the customer and the bank, where we determine who is correct/right pertaining to a certain issue and pronounce on it. Other complaints, if found beyond our mandate, are referred to other alternative dispute resolution channels and institutions. The 129 complaints we received in the 2012/13 financial year therefore do not include such enquiries.

With personal loans, customers are mainly asking why a loan is not finishing after they have been paying for a long time. Every facility that a customer enters into with a bank must have a contract. However, what happens is that many people once they secure the loan, become very excited and don’t even read or put their contracts in safe custody for future reference. Loans have terms and conditions that are explicitly clear and easy to read and understand. Bank staff should be available to walk you through these and we expect customers to insist that these be explained to them including the implications thereof at the time of access to the facilities. For, example, a common oversight on the side of the customers is where the prime rate increases or decreases; one may have to approach the bank and ask about the implications. We urge customers to study their loan contracts all the time, and not only at the time when they think they are about to fully pay it/them.

BusinessWeek: What is the issue with the high incidence of mortgage complaints?

Maotwanyane: It is still the problem of reading contracts. When people secure the loan, they only think about when they will finish paying, not how much they will pay or what they can do to speed up the loan. It should be noted that personal loan terms and conditions are quite different from the mortgage loans especially in terms of the loan repayment period or tenor. Obviously with long-term loans the interest to be paid is comparatively higher due to the longer repayment period.

Customers should ask their advisers at the bank about these issues, or risk finding themselves with high charges if they don’t.

BusinessWeek: What is the nature of complaints regarding unauthorised debits and fund transfers.

Maotwanyane: Customers approach a vendor for a product or service paid via debit order and when things go wrong, they try and stop the payment order. It should be noted that the customer is responsible for entering into a contract with a third party and if information is divulged to that party, let us say, your credit card/debit card details or you complete an agreement to pay the provider monthly, you may not instruct the bank to stop such because the onus is now on you to terminate your original contract with that provider.

One example is where someone goes to a car rental company or hotel and if they are surcharged for a service or so, the hotel or rental agency may have their information and later recover the money from their respective accounts as they have details to such accounts. The bank is obliged to honour such payments without questioning and the customer is the one who has given the company the right and information to do that.

The most common complaint we receive concerning fund transfer is about the failure by the bank to carry out an instruction and also where a customer has a disagreement with the supplier and now wants the money which has already been received, returned back. It is not possible to have money returned if it was sent according to the customer’s instructions and such being executed. When you send money to someone outside the country, once it is received, the beneficiary (person the money is intended for) is requested to provide certain information according to Internal Money Laundering Laws. If such information is delayed or not forthcoming, the money is returned back with exchange losses and charges to the applicant (customer).

BusinessWeek: Complaints about ATMs are among the highest you receive. Most people should surely not still be having problems with operating ATMs by now?

Maotwanyane: We are seeing that many people now know how to use ATMS and we no longer have the old issues. However, there are still issues of people disclosing Personal Identification Numbers (PINs) to other parties such as family members, spouses and friends. If you have reason to believe that your PIN is known by anybody through whatever means, you are able to change it at an ATM of your bank at anytime. There are however, cases involving real criminals who go to the ATMs and insert some devices into ATM Machines where they may later recover people’s cards. Once this happens to you at the ATM do not let anyone assist you or use the ATM before you call your bank to stop it. You should always carry your bank’s contacts with you all the time and treat your ATM card just like cash.

BusinessWeek: Turning to your mandate, we see round the world that the banks are usually represented by a Banking Council or Association and operate independently from any Banking Ombudsman office in order to build public confidence in your integrity. What is the situation regarding your office as you are financed and report to the Bankers’ Association?

Maotwanyane: We have been crawling and now we have managed to stand up and walk, although there are challenges here and there. We are positive that soon things will normalise.

Stemming from the International Network of Financial Services Ombudsman initiatives in laying out the requirements of a financial services ombudsman, the World Bank produced a report in 2012 laying the Guidelines and Policy on how an ombudsman’s office in the financial services should operate and this was presented to major stakeholders. The purpose was for them to appreciate current trends in the industry. The report is available under the World Bank website consumer sections.

BusinessWeek: What is best practice according to your experience?

Maotwanyane: A desired structure is no different from any corporate governance structure, where there is an independent board comprising members of consumer bodies, agency of government concerned with consumer issues, Banking Council/Bankers Association, etc which appoints the CEO Ombudsman. The ultimate reporting lines would be spelt out.

Developed economies such as South Africa have ombudsman in various fields such as banking, pension, insurance, media etc, which are very effective in serving their consumers. Unfortunately we seem not to be aware that the time is now for us to go that route.

It means our consumers are not well served as they are unable to voice their dissatisfaction and conversely we are unable to get feedback from them on how we are serving them or how best to serve them. Our outlook for 2014 is to have a fully functional office, which has the independence to carry out its mandate and the restoration of integrity among customers. We also hope that this year, financial literacy initiatives are conducted on a larger scale given the issues of high indebtedness.