How to stop your bank ripping you off

Maladministration by South African banks is more common than most people think, and it can result in your bank overcharging you by making unapproved changes to your account.

Ombudsman for Banking Services (OBS) Reana Steyn said that her office closed a total of 5,996 cases in 2019, 2,356 of which were related to maladministration by local banks.

“This makes up a significant 39% of all our complaints. The types of complaints included issues such as allegations of accounts settled and disputes around fees and charges,” Steyn said.

“In many of these cases, the OBS found that there was indeed maladministration on the part of the banks involved.”

“Maladministration” refers to a range of issues, including the changing of an agreed contractual repayment term, a decrease or increase in agreed monthly instalments, or the failure to appropriately adjust instalment or interest rates.

This could result in the term of a client’s agreement being extended or an incorrect balance, resulting in customers having to pay more than what was agreed on.

Check your statements

The Ombudsman urged South African consumers to check their bank statements for potential issues which could be attributed to maladministration.

“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.

Customers who suspect maladministration on their accounts or who feel that there are problems with their debts should raise their concerns directly with their banks.

If customers are not satisfied, they can lodge a complaint with the OBS to investigate the issue.

“We encourage bank customers to be vigilant, and it is very important to keep signed records of agreements and to report any incorrect entries or balances on their accounts immediately to their banks,” Steyn added.

Case study

The ombudsman provided a case study of a banking customer who had issues with her personal bank loan due to maladministration from her bank.

The customer experienced financial difficulty in April 2015, after which 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 the bank had extended the repayment term of her agreement for a period of five years, alleging that she requested this change. She disputed having agreed to this restructuring.

“The OBS investigation revealed that the bank was unable to furnish any proof that the complainant requested or agreed to the restructure of the loan account, as is required in terms of Section 116 of the National Credit Act, 34 of 2005,” the ombudsman said.

“Accordingly, the OBS determined that the bank should adjust the loan account in order to place her in the same position she would have been in had the restructure not occurred. This resulted in an adjustment of R64,000.”

Steyn said this case study shows the importance of checking your statements and keeping records of conversations and contracts.

“Do not leave anything to chance, errors can happen, and this costs consumers many thousands of rand,” concluded Steyn.

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How to stop your bank ripping you off