2020 Media releases

1. Keep your cards close

During the festive season, protect your cards, shield your PIN, and never share your bank details. If your card goes missing, contact your bank immediately. Under the Code of Banking Practice, banks must compensate customers for unauthorised transactions unless customers have breached the terms and conditions of their card, or they haven’t taken reasonable steps to protect their banking details.

Last year, 582 of Banking Ombudsman complaints related to cards (or 13% of total cases) and the meaning of “reasonable” is often considered.  For example, when out at the pub on a business trip, a thief watched Marcel* closely as he paid for drinks, picked his pocket, and spent $30,000 on his bank card. Marcel’s bank wouldn’t compensate him – they said he’d disclosed his PIN and contributed to the loss. The Banking Ombudsman didn’t agree. Marcel didn’t know he was being watched, and the facts suggested he’d taken reasonable care when he entered his PIN. Marcel was reimbursed with interest for all unauthorised transactions. See our quick guide on cards and PINs.

2. Take care to avoid scams

Scammers are getting smarter and sharper, and the stakes are high for banks and their customers. “Scam complaints are on the rise,” says Ms Sladden. “Last year we received over 370 complaints about scams and fraud, and that’s just the tip of the iceberg. When shopping online, only use your card on trusted sites. Beware of random texts (such as the bogus package delivery text), or emails asking for login details, PINs or passwords. Before clicking links, stop and think, is this for real?”

While banks have a general obligation to reimburse customers for fraud from unauthorised transactions, sometimes - such as in romance or investment scams – customers authorise payments. In these cases, we consider whether the bank acted with reasonable care and skill. For example, when Jamie* authorised a transfer of $43K to ‘Sarah’s’ overseas account, he didn’t mentioned they’d met on an online dating site, and said Sarah was a trusted friend. The bank couldn’t warn Jamie about something it didn’t know about. Similarly, when Sue and Chris* lost their life savings to an investment scam, they told the bank the $100K was for family and a holiday.

Other scams include phone PIN scams (never give out your PIN or password), Mule scams (never accept money into your account for transfer to others), Phishing scams (delete emails that appear to be from your bank asking for passwords - banks don’t do this), and remote access scams (don’t give access to your personal devices or provide codes and passwords). See our quick guide on scams.

3. Remember payments aren’t processed over public holidays

If you’re making or expecting a payment over the holidays, check the cut off times with your bank. Payments to other banks aren’t processed over weekends or on public holidays. Payments made on non-business days will be processed the next business day. See our quick guide on payments.

Most importantly, take care and have a relaxing break.

Meri Kirihimete from BOS.

www.bankomb.org.nz     

ENDS

Please attribute all comments to Nicola Sladden, Banking Ombudsman

A high number of people continue to contact the Banking Ombudsman Scheme, although fewer complaints about banks escalated into a dispute in the last financial year. The scheme has maintained high customer satisfaction (83 per cent) and delivered faster resolution of cases.

The scheme received 4,582 cases in the 12 months to 30 June 2020, a drop of 4.5 per cent on the previous year. The biggest change in case volumes came from disputes, with only 144 received, a decrease of 21 per cent on last year’s volumes.  

Banking Ombudsman Nicola Sladden said prevention measures had contributed to the fall, as had a greater emphasis on early guidance and assistance. The scheme has collaborated with others more to build financial capability and promote high standards of conduct and customer care.

“Lending-related complaints continued to dominate our work, followed by bank accounts and payment systems, although one new addition was complaints relating to COVID-19. In all, we received 225 such cases, most of them about how banks responded to customers’ financial hardship.”

Ms Sladden said facilitated outcomes continued to account for more than half of all dispute outcomes, which she attributed to a greater willingness on the part of banks to resolve complaints.

Payments to customers for the year topped $1 million, which was up on the previous year’s figure. Nine disputes resulted in compensation of more than $30,000, most of which related to fraud and scams.

The annual report details successes throughout the year, including setting up an industry-wide complaints dashboard and improved stakeholder engagement.  

A five-yearly independent review during the year scored the scheme highly on quality and output. The review found the scheme operates with integrity and professionalism, and to be highly effective.

Ms Sladden said the scheme was continuing to focus on providing actionable insights to banks based on analysis of its caseload, along with informative material for consumers.

“In these uncertain times, a dispute resolution scheme like ours has never been more important, particularly since we can offer faster, more flexible results than would be possible through the courts.”

The summary annual report can be read here.

ENDS

Please attribute all comments to Nicola Sladden, Banking Ombudsman

Access to the online resource will be via the website of the Banking Ombudsman Scheme, which is co-ordinating the initiative on behalf of its members.

Banking Ombudsman Nicola Sladden said the dashboard would provide for the first time an overview of the nature and extent of complaints and how banks responded.

“Until now, the scheme has been the only source of information about complaints, but our information has been incomplete because we deal with only complaints banks have been unable to resolve themselves.”

The sector’s dispute resolution scheme received 722 complaints in the second quarter of this year. By comparison, the dashboard shows banks received 21,468 during the same period.

The dashboard breaks down complaints by product and service type (such as credit cards, investments, insurance and processing methods) and the underlying problem (such as transaction error, faulty advice or information and unwarranted or excessive fees). It also shows how long each type of complaint took to resolve and what the outcome was. Complainants are profiled by age, gender, location and whether an individual, business or trust.

Ms Sladden said the interactive dashboard would be updated quarterly to show trends and cumulative totals. Data on complaints about individual banks would begin appearing by February 2021.

She said banks backed the initiative because they recognised that gathering industry-wide information would provide a wealth of insights into how to improve customer outcomes.

“It’s a fact of life that when you deal with hundreds of thousands of customers and process millions of transactions each day, things will sometimes go wrong. The vital thing is to identify, correct and learn from these mistakes. The dashboard will help greatly with that effort.

“The other benefit is that it will enable customers to see how their bank’s complaints and complaints-handling record compares with that of rivals.”

Ms Sladden said she had been heartened by the way banks got in behind the initiative, which also had the backing of the New Zealand Bankers’ Association, the Financial Markets Authority and the Reserve Bank of New Zealand.

“How banks respond to and learn from complaints says a lot about culture and conduct. We expect the increased transparency provided by the dashboard will lead to better customer outcomes,” Reserve Bank Governor Adrian Orr says.

Rob Everett, FMA Chief Executive said “We’re pleased to see the Banking Ombudsman launch this customer complaints dashboard. This shines a light on customer concerns and how banks are addressing them. These are important ingredients for ensuring customers are treated fairly.”

The dashboard can be found here.

ENDS

Please attribute all comments to Nicola Sladden, Banking Ombudsman

Right now, people understandably have a lot of questions and concerns about their financial circumstances and the impact COVID-19 is having on them. Here are some of the common questions we are getting along with our answers. We encourage you to contact us if you would like to discuss your specific circumstances. We are open for business and here to help. Phone 0800 805 950 or email help@bankomb.org.nz.

ENDS

Please attribute all comments to Nicola Sladden, Banking Ombudsman

“We quite regularly have people contact us because their accounts have been closed. Where that’s about anti-money laundering requirements not being met banks don’t have a choice, but in other cases it can be a matter of policy rather than law.

“Taking banking services from a customer can significantly impact that person’s ability to participate in society and manage their affairs. Banks are required to act fairly and reasonably.

“Because of the implications, especially for people who are often already vulnerable, exiting a customer is not a decision that should be taken lightly.

“Banking services are central to how people navigate society and as such any decision to close a basic account should be for good reason.

“Getting a consistent understanding of this is part of the culture change we want to see in the sector.”

The Banking Ombudsman Scheme is a free and independent service providing support for fair banking outcomes.

ENDS

Please attribute all comments to Nicola Sladden, Banking Ombudsman

The five-yearly review, conducted by consultant Deborah Hart, found the Banking Ombudsman Scheme was operating with integrity and professionalism, and was highly effective, outward-looking and proactive in finding ways to resolve and prevent disputes. The review also said the scheme met its terms of reference, legislative requirements and strategic objectives. 

However, the review did urge more effort to get low-income, non-English-speaking bank customers to use the scheme’s services. It made five recommendations to boost the scheme’s profile so a wider cross-section of the community sought its help. These were to:

• involve banks themselves more in publicising its work
• formalise how it identifies and manages complaints from vulnerable consumers
• produce more instructional and advocacy material, and conduct more in-person clinics
• support advocacy services to spread the word about the scheme
• work more closely with other relevant agencies and dispute resolution services.

The review also made nine other recommendations about strengthening fairness, independence, accountability and effectiveness.

Banking Ombudsman Nicola Sladden said the scheme was already looking into, or had begun implementing, all 14 recommendations.

She said she had been well aware that a disproportionate number of customers were older, wealthy and English-speaking.

“Banking problems obviously affect everyone, regardless of age, status or ethnicity. Our challenge – and it’s one we’ve been putting a lot of work into – is to get the message across to all Kiwis that we’re free, independent and here to help if they have a banking problem.

“We face this challenge despite already being New Zealand’s best-known financial dispute resolution service by a considerable margin.”

Ms Sladden said the scheme had also been looking for more ways to reach out to youth, newly arrived Kiwis and low-income individuals and families. It was making more use of use of social media, adopting innovative marketing strategies and working more closely with frontline organisations such as budgeting services.

ENDS

A copy of the review is available here.

Please attribute all comments to Nicola Sladden, Banking Ombudsman