Incorrect balances and terms on home loans, personal loans and revolving credit make up a significant portion of complaints to the Ombudsman for Banking Services (OBS), according to its latest report. Of the 5 996 cases it has closed so far this year, nearly 40% were related to maladministration by banks.

According to Reana Steyn, Ombudsman for Banking Services, many complaints related to fees and charges and many were found in favour of the consumer.

Steyn says the OBS is often in the best position to identify and investigate maladministration by banks as and when it occurs, but says customers can assist by being vigilant and querying their statements and balances timeously.

According to the OBS, bank customers must take the time to go through their account statements. It is not impossible that the balance, repayment or outstanding loan period could be incorrect.

“It is natural to trust that bank statements are always correct and that errors are unlikely. However, the OBS receives complaints relating to maladministration on a daily basis,” Steyn said.

The term “maladministration” refers to a range of issues that could go wrong. For example, the unilateral changing of the agreed contractual repayment term, a decreased or increase in the agreed monthly instalment or the failure to appropriately adjust the instalment and/or interest rate. Such actions could result in the term of the agreement being extended or an incorrect balance, resulting in customers having to pay more than what was agreed on.

The OBS will investigate all matters and consider the facts of each dispute as well as what is “fair” under the circumstances.

Human error or system error

Maladministration by the banks may be due to human error or a system error. If banking maladministration is established, the OBS has the power to direct the bank to rectify the situation for the customer. In addition, the OBS may direct that the bank offers a nominal award for distress and inconvenience. As mentioned above, each case is decided on its merits.

Steyn said that bank customers who suspect maladministration on their accounts or who feel that their debts owed to the bank are not decreasing as they should be, need to raise their concerns directly with their banks.  If they are still not satisfied, they are urged to lodge a complaint with the OBS for an independent investigation into the complaint.

How to complain

• Lodge a formal, written complaint directly with your bank’s dispute resolution department.
• Ask for a complaint reference number from your bank.
• Allow the bank 20 working days in which to respond to your complaint.
• Obtain a written response from your bank, OR
• Consumers can contact the office of the Ombuds for Banking Services for free assistance if they experience any banking problems or would like assistance with lodging a complaint against their bank.
• Complaints may be lodged with the OBS via email, the website or telephonically on 0860-800-900

Case Study 1

The complainant had obtained a personal loan from the bank and in terms of the agreement, her last payment was due on 25 December 2018. She experienced financial difficulty and in April 2015 she made arrangements with the bank to pay a reduced instalment for a period of six months. Towards the end of the term, she noticed that the bank had extended the repayment term of her agreement for a period of five years alleging that she requested this. She strongly disputed having requested, signed or agreed to a restructuring of her account.

The OBS investigation revealed that the bank was unable to furnish any proof that the complainant requested or agreed to the restructuring of the loan, as is required in terms the National Credit Act. The OBS therefore determined that the bank should adjust the loan account in order to place her in the same position in which she would have been had the restructuring not occurred.  This resulted in an adjustment of R64 000.

Case Study 2

The complainant had defaulted on a loan payment in August 2017.  He then entered into a payment arrangement with the bank and was advised that the term of the loan would be extended for one month. He later noticed that the term of the loan was extended for two years. The complainant wanted the bank to reverse the interest that accrued due to the unilateral extension of the loan term.

The OBS investigation considered the phone records between the bank and the complainant and determined that the complainant did not ask for the monthly instalments to be reduced and – more importantly – there was no meeting of the minds between the bank and the complainant regarding the extension.

The OBS recommended that the bank reverse the full interest amount accrued as a result of the unilateral extension of the term of the loan, and the monthly instalments were also reduced.

This article first appeared in City Press.