Report reveals shocking admin failures by banks and credit firms

THE National Financial Ombud Ombud Scheme (NFO) has been operating for just over a year, and last week it released its first annual report, for 2024.

- 

The scheme incorporated the ombuds offices for insurance, banking and non-bank credit providers under an overarching Chief Ombud, with separate divisions for the different industries. Thus the annual report covers, among other things, consumer complaints across these financial services industries, with each division presenting its own statistics and case studies. (The report is available to download at nfosa.co.za — see QR)

What struck me in the case studies for the banking and credit divisions was the number of cases that were decided in the complainant's favour because of administrative failures on the part of the product provider, including the absence of transaction records.

These are isolated events, so one cannot generalise and conclude that there are widespread administrative weaknesses in the banking and credit industries. But when one considers their supposedly sophisticated computer systems, even a single case of this nature is concerning.

Access to home loan account

The complainant (Mr A) compromised his banking details, which led to fraudulent online transactions on his credit card after funds were transferred from his paid-up home (mortgage) loan account to his credit card account. The question was how the fraudsters could have had access to Mr A’s home loan account.

When Mr A had entered into the home loan agreement, he had opted for an access facility on the loan. He had settled the outstanding balance on the loan prior to the repayment term lapsing and had not instructed the bank to cancel the bond and close the account.