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Banking Ombudsman sees rocketing internet-related complaints

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The Ombudsman for Banking Services (OBS) says it saw a massive increase in the number of complaints made by consumers against their banks in 2021, with tech glitches and fraud complaints topping the list.

In a media statement, the OBS says, over the past two years, the COVID-19 pandemic has disrupted the traditional banking model, testing it to its limit – resulting in banks battling to adequately address consumer demands.

Banking services ombudsman Reana Steyn points out that 2021 yet again saw a notable increase in consumer complaints against South African banks, with a 7% increase compared to 2020 and a 28% increase from 2019.

Over 10 330 complaints were received and referred to the banks in 2021 compared to the 8 389 cases in 2020. Referrals are complaints received by the OBS from consumers who have not provided their banks the opportunity to resolve the complaint with them in an amicable manner.

According to the OBS, most of the complaints opened and investigated by the office in 2021 involved instances where bank customers experienced internet service-related issues and where consumers became victims of various types of fraud.

“The top category of complaints received was internet-banking-related and fraud. We were not happy to see that, because it means customers are losing money. Internet banking complaints accounted for 19% of the total complaints opened.

“This is an alarming 6% increase from 2020 and a worrying statistic, as it goes against the progress made in 2020, where the number of internet fraud victims had dropped significantly to a record low of 13% of the total complaints,” says Steyn.

Types of internet banking fraud complaints received include bank transfer scams, e-mail or text scams, account take-over fraud, phishing and vishing, among others.

While internet fraud victims approach the OBS to try and recover lost money, in most instances the watchdog was unable to assist in recovering funds, she adds.

According to the South African Banking Risk Information Centre annual crime stats report, digital banking fraud increased by 33% in 2020.

The OBS states the significant online banking uptake has led to a decrease in the number of ATM-related complaints opened, accounting for 7% of the total complaints. This is a 2% decrease from 2020 and a further 6% decrease from 2019.

“ATM-related complaints previously constituted the largest number of complaints that were received and investigated by the OBS. However, due to people choosing technology to do their banking, internet banking has taken over, influenced by the pandemic,” adds Steyn.

Other types of complaints received include maladministration by banks, consumers being debt stressed, account closures by banks and consumers disputing fees or interest rates. Consumers also sent complaints relating to personal loans, mortgage and vehicle finance.

In 73% of the matters resolved by the OBS office in 2021, the findings were in favour of the banks. Of the matters concluded in favour of the complainants, over R19 400 000 was awarded and offered because of the OBS’s direct intervention, according to Steyn.

Cases opened against South African banks in 2021:

  • TymeBank saw a major increase in the number of complaints logged in 2021, with an increase of 871%. However, these complaints came off a low base of only 24 complaints in 2020, to 233 complaints in 2021.
  • Discovery Bank complaints decreased by 26.7%.
  • First National Bank saw a significant drop from 2 197 complaints in 2020, to 1 452 complaints in 2021 (a 34% decrease).
  • Standard Bank saw an increase of 31.6% in the number of complaints, with the total number increasing from 1 572 complaints logged in 2020, to 2 070 in 2021.
  • Capitec Bank saw an increase in complaints from 1 259 cases in 2020, to 1 651 in 2021, representing a 31.1% increase.
  • Absa had an increase from 943 cases in 2020, to 1 068 cases in 2021 (a 13.3% increase).
  • Nedbank accounted for 1 273 of the cases opened − an increase of 4.3%.
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