The Ombud for Banking Services (OBS) says banking disputes regarding current accounts and internet banking remain high, despite banks making a greater effort to resolve consumer complaints internally.
In the OBS Annual Report 2022, Reana Steyn, Ombudsman for Banking Services, said that 2022 significantly differed from the prior two years.
“As Covid-19 gradually loosened its grip on the front-page headlines, on business, and daily life in general, it became clear that the yearned-for returns to ‘normality’ and to ‘business as usual’ were taking new shape and being actively pursued by all,” Steyn said.
“In reality, some of the consequences of the pandemic lingered – not least of all in the way that people continued to work throughout 2022, as working from home and more flexible hours became the ‘new normal’ for many.”
The Ombud said that 2022 saw a 13% year-on-year rise in the number of referrals – where a customer contacts the OBS before the bank refers a matter and considers it a dispute.
Although the number of referrals increased, there was a 5% decrease in the number of formal cases opened compared to 2021 – down to 7,869 in 2022 from 8,257 in 2021.
Case closures also saw a 7% drop from 8,150 in 2021 to 7,574 in 2022.
“This could be attributed to the growing industry trend to keep complaint numbers down through resolving disputes internally at an early stage. There is also a drive to improve customer experience and avoid negative public sentiment,” Steyn said.
“However, our overall active case numbers have remained high, with an average of 1,424 cases open at any given time.”
The number of days taken to close a case also dropped to 67 days in 2022, down from 70 days in 2021. 52% of cases took less than two months to resolve, while 37% took between two and four months, and 11% took over four months.
In terms of the age of complainants, 72% were of working age – between 26 and 66, 24% were for people older than 66, and 4% were for people younger than 26.
Steyn said that the large number of complaints from older people could indicate that these consumers are more vulnerable to fraud in the digital banking space.
Regarding sex, male complainants comprised 54% of complaints, while female complainants comprised 46%.
Overall, Gauteng was the province with the most complaints (47%), with the Western Cape (17%) and KwaZulu-Natal (13%) completing the top three.
The report found that complaints about current accounts and digital banking were the two main categories of cases opened in 2022, with the majority of cases in both categories involving fraud. This follows the trend from previous years.
Current account cases jumped to 22% of total cases – a three percentage point jump from 2022. 65% of these cases were related to fraud.
Whereas digital banking cases also jumped by three percentage points to 17%.
“The biggest subcategories of complaints in this regard are mobile banking fraud and vishing,” Steyn said
Vishing, or voice phishing, involves a fraudster calling a customer by phone while pretending to be a reputable company to gain access to their personal information.
Complaints about Personal Loans totalled 13% of all cases opened, while Credit Card-related complaints totalled 7% of total complaints.
Steyn said that banks are settling more credit-cared related claims matters internally, with her office opening 7% fewer of these cases in 2022.
ATM cases, a top category in pre-Covid years, continued to drop, going from 8% in 2021 to 5% of all cases in 2022, as fewer consumers use this channel and fraudsters look elsewhere.
Steyn added that Estates and trusts were a significant topic in 2022.
“We received 257 complaints regarding delays in the finalisation of estates, compared with 120 the year before (an increase of 114% year on year).”
Moreover, she said the number of complaints about banks collecting Prescribed Debts grew substantially. In 2021, these complaints comprised 1.4% of all complaints, growing to 4.5% in 2022.
Customers vs banks
Overall, of all the cases closed in 2022, only 23% were resolved in favour of the customer, while 16.1% of cases were fully or partially upheld in the complainant’s favour.
Estates and Trusts complaints were mainly in favour of the customer, with 55% of complaints in favour of the customer.
Across the year, the Ombud recovered over R30 million for customers, a R10 million increase from the previous year. Steyn attributed this to the increased number of complaints concerning deceased estate delays and internet banking.
The overall performance across the banks varied significantly.
Nedbank and Capitec saw the largest increase in the number of complaints, rising by 18% (1,273 in 2021 to 1,508 in 2022) and 11% (1,651 to 1,826), respectively.
Standard Bank, however, saw a 31% drop (2,070 to 1,385). FNB also saw a 21% reduction (1,452 to 1,147)
Overall, Absa had the lowest number of cases across the major banks, decreasing from 1,068 in 2021 to 1,063 in 2022.
According to the Ombud, the best way to see how banks handle complaints can be seen in their conversion rate of premature cases to formal complaints.
African Bank saw the highest number (72%) of referrals being converted to formal complaints, followed by Nedbank (64%) and Tyme and Bidvest banks (both 53%). On the other hand, FNB converted only 34%.
The bank with the best turnaround time (the average number of days to close complaints) was Capitec at 58 days.
Standard Bank had the worst turnaround time at 73 days.
Capitec also had the highest percentage of cases in its favour (85%), with Nedbank having the lowest (72%).
As banks differ considerably in several metrics, the number of cases opened against a bank is not indicative of how they handle complaints.
“Banks vary considerably in size, client profile and product mix, and these factors all impact on the number of complaints made against a bank,” Steyn said.
“Comparing the number of clients, the growth of the client base for some and more importantly, the number of successful banking transactions taking place every day, the low total number of complaints at the OBS could be indicative of the fact that things mostly work the way they should in the South African banking space”.