Banking Ombudsman: SA consumers faced increased challenges

The world has seen a significant shift towards digital banking solutions in response to COVID-19 regulations, and South Africa has been no exception. However, this rapid transition to digital platforms has brought about a new set of challenges for local consumers, resulting in record levels of complaints and millions of rands in compensation being processed over the past year. Reana Steyn, the Ombudsman for Banking Services, recently shed light on the increasing trends in consumer complaints and the key issues facing the banking sector in South Africa. One of the key trends identified in the report is the rise in internet banking fraud, with a noticeable increase in complaints related to fraudulent activities. Consumers are increasingly falling victim to fraud and incurring financial losses, leading to heightened dissatisfaction among bank customers. The Ombudsman highlighted that while they strive to assist consumers in recovering lost funds, there are limitations, especially in cases where fraudsters gain access to personal information through phishing emails or phone calls. Another concerning trend highlighted in the report is an uptick in car and motor vehicle finance complaints, indicating that consumers are facing challenges such as repossessions in this sector. On a positive note, complaints related to Automated Teller Machines (ATMs) have significantly declined, attributed to more consumers opting for digital banking services over traditional in-person transactions. Additionally, phishing charges and bank closures have emerged as new areas of concern, reflecting a shift in consumer behavior and banking practices. Despite these challenges, the Ombudsman noted that major banks in South Africa are actively working to address consumer complaints and improve customer service standards. She highlighted the role of the Financial Sector Conduct Authority (FSCA) in holding banks accountable and noted that social media and consumer activism are driving banks to prioritize fair treatment of customers. Regarding the resolution of complaints, the Ombudsman reported that in 73% of cases resolved, findings were in favor of the banks. She clarified that this outcome is not solely attributed to the banks' resources or expertise but rather the nature of cases that reach her office. The Ombudsman explained that many cases are initially resolved by banks internally, and only escalated to her office if consumers are dissatisfied with the outcome. Despite the challenges, the Ombudsman managed to overturn 30% of cases in favor of consumers, highlighting her commitment to ensuring fair outcomes for bank customers. While some banks may face a higher number of complaints, the Ombudsman emphasized the importance of considering the growth trajectory and context of each institution to accurately assess their performance. In conclusion, the report by the Banking Ombudsman underscores the need for continued vigilance in addressing emerging challenges such as internet banking fraud and vehicle finance complaints. It also highlights the positive efforts being made by banks to improve customer service standards and uphold consumer rights in South Africa.