Banks should take note of how the OBS has dealt with complaints: the OBS 2021 Annual Report

The Ombudsman for Banking Service’s (“OBS”) 2021 Annual Report reveals some useful guiding principles for banks and customers who are in dispute.

According to the report, in 2021, it assisted thousands of complainants in recovering an amount of approximately ZAR19.5-million. The OBS fielded 14 880 calls and referred 10 338 cases to banks. This represented a 7% increase in cases opened and a 9% increase in closed cases, compared to the same period in 2020.

The OBS remains a cost-effective and efficient way of resolving certain types of disputes between banks and their customers. The OBS’ role is not limited to assisting in the resolution of disputes. It also aims to educate consumers about banking matters. Of the complaints received in 2021, the OBS resolved 73% in favour of a bank and 27% in favour of the complainants. It is also encouraging to see that just short of a third of complainants learnt of the OBS through their bank.

The report includes useful case summaries and the following principles emerged from these cases:

Banks are not allowed to collect a debt that has prescribed in law;
When placed in a position to mitigate a customer’s loss, banks have an obligation to ensure that it does all that is necessary to assist the customer, otherwise the bank is held liable for the loss that it was in a position to prevent.
Banks have a legal duty to ensure that they comply with a court order. Each case is adjudicated on its specific facts. If a bank fails to comply with a court order, the bank will be held accountable for the prejudice that is suffered by its customer as a result of the bank’s failure.
If a bank fails to adhere to its own internal process, causing the customer to suffer a loss, the bank would need to take accountability for that loss and place the customer in the position the customer would have been in, had the bank followed the correct internal process.
Banks must ensure that they are aware of and comply with the MasterCard Rules when a dispute is received from a customer in respect of a merchant.
If a payment arrangement is concluded and is adhered to by the complainant, the bank cannot proceed to apply for judgment.
Inter-bank processes are in place in the internet banking fraud space to ensure that banks are able to mitigate a customer’s loss if it is in a position to do so. It is important for these processes to be followed.
A failure on the part of the bank does not automatically result in its customer being entitled to compensation. In addition to proving negligence or maladministration on the part of the bank, a customer must be able to prove that as a result of such negligence or maladministration, it suffered a loss. If no loss has been suffered, there would not be a finding in the complainant’s favour. If the customer suffers a degree of distress and inconvenience as a result of the bank’s actions, the OBS may require the bank to compensate the customer for the distress and inconvenience caused.
Customers should not be negatively impacted by COVID-19 payment relief, if they adhere to the terms of the relief.
Legal costs may only be debited from an account if the customer agrees to make payment of such costs, alternatively if the legal costs have been taxed by the Taxing Master.
Clear communication by the banks is imperative and banks should always place their customers in a position to make an informed decision.
Customers have a duty to ensure that they carefully read their SMS/one-time password notifications before authorising a transaction. Failure to do so would result in the customer being held responsible for the loss that is suffered.
Banks cannot be held liable for the negligence or maladministration of a third party.
A customer cannot expect to be unjustifiably enriched in respect of a debt that it did not settle. Fairness and reasonableness work both ways.
Banks cannot be held accountable for contracts that it was not a party to. If there is a joint bond and one bondholder wants to take over the bond, a substitution of debtor application would have to be made. This application would only succeed if the customer qualifies for the debt in terms of the affordability assessment that is required under the National Credit Act.

Aslam Moosajee

Dispute Resolution | Executive

amoosajee@ENSafrica.com

Shenaaz Munga

Dispute Resolution | Senior Associate

smunga@ENSafrica.com