South African banks have blatantly ignored previous calls from the Banking
Adjudicator to get their service levels up to scratch, the Banking
Adjudicator says in his damning second annual report released this week.
`It appears from the complaints received after publication of the first
report that few of our comments on shortcomings in their service to
customers have been taken to heart by the banks.`
David John, the acting Adjudicator, says the office has also on occasion
found bank officials reluctant to co-operate with the Banking Adjudicator`s
office in trying to get consumers` complaints solved.
Instead of putting right what was wrong or providing reasons why the
complaint was unfounded, these officials have dismissed complaints ``on the
merest technicality``, he says.
He warns the banks to get their house in order on several issues and his
comments indicate that he believes the new Code of Banking Practice, which
became effective this month, does not go far enough.
Personal Finance revealed earlier this month that the code, which was drawn
up by the banks and launched with great fanfare last month as the basis of
the protection of bank clients, was contravened by at least two banks
within hours of its launch.
The matter of cheques lost in the banking system is one example of an issue
in the code the Banking Adjudicator disagrees with. The banks say they
cannot accept responsibility for cheques lost in the banking system and
they are required by law to get the actual cheque before paying money out
from an account.
If a cheque you paid into your account is lost by the
bank, you have to get a replacement and pay it in again.
John says the law does not absolve a bank from liability for negligence in
losing a cheque.
``Loss is often a euphemism for theft and, a process in which the customer
has no possible way of taking part and should not therefore bear any risk
of loss.``
John also takes a firm stand on confidentiality. The new code states that
banks can reveal information about you in certain instances, one of which
is ``when it is in the bank`s interest to do so``.
John says this exception to the secrecy rule makes confidentiality a source
of concern for his office.
He has also warned banks strongly against
allowing investment consultants, advisers or brokers employed by or
associated with the bank, access to your information for the purpose of
persuading you to make investments.
Some other bank practices which the adjudicator slammed are:
* Allowing individuals to make withdrawals with a bank card and personal
identification number (PIN) at a teller without calling for proof of
identification. This practice allows criminals who have obtained your card
and PIN to clean out your account in one day. Counter withdrawals often
have higher limits or no limits at all;
* The failure of the banks to take any responsibility for quality of the
building you intend buying or are building, even though the bank sends an
inspector to the property and charges a fee for this.
Banks have consistently said that the inspectors only assess the value of
the security when checking out your property, but John says this is not
good enough. If your bank wants to continue charging you for the
inspections, it should employ inspectors who are trained to check that the
construction is sound;
* Banks have been too quick to attach properties when borrowers fall into
arrears without giving the borrower a little extra time to pay the arrears
or to sell the property for a price that could cover the outstanding loan;
* The failure of banks to make sure that insurance on homes and vehicles,
which have been bought through bank loans, is set up. Your bank should
ensure that insurance is taken out and that you understand who has to pay
the premiums, you or the bank;
* ATM crime is a common source of complaint and two practices of banks must
be reviewed. The first is the facility to transfer money immediately from
one account to another unrelated or unlinked account at the same bank. The
other, offered only by one of the large banks, allows cheques to be drawn
from an ATM with a daily limit of R5 000 a day. These practices allow
criminals to ransack your account once they get hold of your card and PIN;
* The surrender by banks of pledged assurance policies which are used as
collateral for loans. Your bank should make every effort to contact you
when it intends surrendering one of your pledged policies so that you have
the chance of maintaining the policy to maturity; and
* When loans fall into arrears, some banks separate the capital and
interest owing into two accounts leaving you in the dark as to what you owe.