By Angelique Ruzicka, editor, Justmoney.co.za
The Ombudsman for Banking Services (OBS), Clive Pillay, has slammed the banks for using jargon and legalese in their contracts with consumers adding that they are ‘falling short of Consumer Protection Act stipulations’. Pillay is now urging the banks to review the wording of their contracts with the need for lucidity in mind.
“We received complaints from consumers who are not sure what they have signed and consequently find themselves in disputes with their banks,” said Pillay. “Consumers sign a loan agreement, for example, when as a result of woolly language and legalese, they think they are signing a vehicle financing agreement.”
Pillay explained that contracts were confusing people and de-motivating them because of their length and the fact that they were drawn up by legal experts. “Writing contracts and forms in plain English would help to reduce the number of complaints of this nature. This has become even more important recently as it is also one of the requirements of Treating Customers Fairly initiative of the Financial Services Board (FSB),” said Pillay.
OBS complaint report findings
In 2013 the OBS dealt with 4950 complaints tackling issues such as mobile banking, credit cards, ATMs, mortgages and car finance. ATM-related complaints dominated the caseload with more than 1,800 complaints compared to 1,100 in the previous year, which accounted for 23% of all complaints.
Over 1,900 cases were found in favour of the consumer which meant the recovery of R16 million from the banks. Among these were 72 debit order issues, dealing particularly with unauthorised debits, 38 (53%) of which went the way of the complainant.
For 2013, the OBS investigated around 200 more internet banking complaints than in 2012. But as banks have been increasing their electronic banking security measures criminals are returning to the ‘easier pickings’ of automatic tellers.
Criminals use several underhand tactics such as removing toll free reporting numbers from machines to delay victims’ alerts to the banks. However, the majority of ATM cases were as a result of consumers compromising their personal details resulting in a greater number of findings for the banks.
Criminals use several underhand tactics such as removing toll free reporting numbers from machines to delay victims’ alerts to the banks. However, the majority of ATM cases were as a result of consumers compromising their personal details resulting in a greater number of findings for the banks.
Pillay added that cell phone banking scams have increased from 19% to 46%, totalling 330 cases. Scams occurred mostly when phones were lost or stolen if consumers answered and liaised with those that sent fraudulent texts. Pillay explained that most fraudsters tried to lure consumers with promises of prizes and getaway trips.
Banks need to strengthen security
Chairperson of the OBS, Advocate John Myburgh, highlighted that banks need to improve their security measures to remain one step ahead of criminals.
“Bank information technology specialists need to work with mobile application developers and wireless network service providers to address the challenges associated with security of financial transactions and transmission of financial information electronically and continually update systems to counter new threats,” he wrote in his report.
“Bank information technology specialists need to work with mobile application developers and wireless network service providers to address the challenges associated with security of financial transactions and transmission of financial information electronically and continually update systems to counter new threats,” he wrote in his report.
Pillay stressed that consumers must take responsibility for their actions as well. “A consumer is not resolved of responsibility and they are expected to be diligent. It’s a two way street.”