Banks Accused Of Customer Exploitation

  • Frustrated Batswana are convinced that banks ‘eat’ their money
  • Survey shows only 43% of consumers being positive about banks
  • But all banks speak of foolproof systems to prevent and/or detect infringement of accounts
  • SA Banking Ombudsman rules some cases in consumers’ favour


The public is increasingly losing confidence in the banking sector and is expressing their distrust and frustrations on various platforms. Many say commercial banks exploit and misappropriate their hard earned money willy-nilly.

Richard Harriman of Consumer Watchdog, in a response to this publication said: “There is widespread distrust of the banking sector by many consumers.”

Harriman says a survey they did some time ago found that only 43% of consumers felt positively about their banks. “Worse still, less than half described the banking industry as honest,” he added. “We receive a number of complaints about banks and the common theme is that banks are not focused on consumers’ needs. They are perceived as distant, uncaring, inflexible and focused on their needs rather than those of the consumer.”

Consumers are concerned about the entire industry rather than about a particular bank, says Harriman who has earned himself Messiah status on social media where he dishes out a lot of advice against complaints and queries.

A cursory look at a variety of social media discussions suggests that the position of Batswana is that banks are engaging in acts of crime as they steal and misappropriate their money while they feel helpless about it due to their limited knowledge regarding the service provider’s operations. On a daily basis, Batswana share harrowing stories of how their money disappears from their accounts and other details of disservice.

But do banks use the ignorance of consumers to their advantage? “I don’t believe that banks actually steal consumers’ money,” Harriman says. “Unfortunately, our general financial literacy in Botswana is very poor and that shows in the number of pyramid and Ponzi schemes to which we fall victim. This is also where banks can play a serious role. We frequently hear of scammers using bank accounts to collect their illegal gains and I’m surprised that the banks don’t have the business intelligence mechanisms in place to detect suspicious activity in these accounts. Why does it take organisations like Consumer Watchdog to alert a bank to suspicious activity in one of their accounts?,” he queries.

The regulator, the Bank of Botswana (BoB), which licenses a range of financial institutions, including commercial and merchant banks and representative offices, did not answer questions from this publication sent last Thursday despite several promises that it would respond.

BoB is expected to contribute to the safety, soundness and stability of the financial system and has mechanisms to protect consumers from the harm that can result from improper business conduct in the banking industry. But Harriman insists on this being a key responsibility of the banks themselves. “Banks are not doing enough to educate consumers on how consumers can protect themselves,” he says. “Or perhaps more importantly, on how they can most effectively manage their money. While they have certainly improved, I also think that the regulators of all financial services, not just banking, have focused too much on Know Your Customer initiatives rather than on calling banks to account about their service levels. KYC is certainly important, but so is customer service, the uptake of new technologies, consumer education and fraud prevention.”

A 2017 report on Money Laundering in Botswana painted BoB in a bad light. “The lack of adequate supervision of banks by BoB owing to capacity and absence of understanding of its supervisory role under the Financial Intelligence Act represents a significant concern for detection and prevention of Money Laundering and Terrorism Financing in Botswana based on risk exposure and materiality of the sector.

“BoB applies a rules-based approach to supervision of banks and bureau de change institutions and does not supervise its regulated entities for compliance with the Financial Intelligence Act and its Regulations due to a lack of appreciation of its supervisory role under the same Act.”

Most banks originate from the neighbouring South Africa where the problems and scandals are not any better. Barclays Bank, which is now Absa, was the most complained about bank in South Africa in 2018, according to the Banking Ombudman’s annual report that BoB could not respond to when approached.

Absa received the most complaints (1,776), followed by FNB (1,560) and Nedbank (1,265). Standard Bank, which owns Stanbic Bank, had 1,203 complaints. Internet banking fraud was highlighted as a major concern followed by ATM fraud and credit card fraud.

In terms of the treating customers fairly (TCF), regulated entities providing a financial product or service must be able to demonstrate that they deliver on six outcomes to their customers throughout the product lifestyle.

The Ombudsman for Banking Services’ (OBS) latest annual report shows that in most cases (97.7% of complaints to the ombud), customers were not satisfied that they had been provided with clear information and kept appropriately informed before, during and after the “point of sale”. This was particularly pronounced in complaints relating to internet banking, ATMs and credit cards, as well as those relating to personal loans, mortgage finance and current accounts. Banks also scored badly when it came to complaints about failing to meet expectations and providing service of an acceptable standard.

The report shows that the OBS finalised 1,349 complaints concerning internet banking, 265 (20%) of which went in favour of the consumer. In only 14% of the 1,053 ATM-related complaints finalised in 2018, the OBS found in favour of consumers, and in 26% of cases relating the credit card complaints, the OBS found in favour of consumers. In all of these categories, complaints are increasingly being settled in favour of the banks or against consumers.

Responding to this publication on customers’ perceptions, Banc ABC’s Country Marketing Manager, Polelo Kilner, said they operate within prescribed operational standards that are intended to safeguard customer funds and provide safe, accessible and reliable banking services. “It is in this context that the Operational Framework in place in our institution ensures that all the operations carried out in the execution of our duties as a bank are sufficiently reviewed to achieve the above,” Kilner said.

“It is against this backdrop that customers should find comfort in knowing that their money is safe with the bank and that the bank will collect whatever fees and payments due in line with what has been published and approved by the regulator and/or as part of customer contracts.”

According to Kilner, in the day to day course of business, the their bank runs checks to ensure that operational standards are adhered to.

Absa spokesperson Spencer Moreri says their bank is committed to hiring and retaining staff based on skills and competence for the role while complying with and satisfying all requirements as per local legislation. “Our pre-employment background screening aims at protecting our customers and organisation from risks such as fraud,” he explains. “Barclays Bank of Botswana has a zero tolerance policy for employees who fail to comply with our Code of Conduct and values.”

Standard Chartered Bank Botswana’s spokersperson, Kunda Neill, says they operate with integrity, transparency and with the principle of treating customers fairly. “We have made key investments in our staff and systems to monitor, pick and, where necessary, investigate any uncharacteristic behaviour to prevent unauthorised transactions and protect our customers,” Neill asserts.

FNBB, which boasts the biggest clientele that is in excess of 500 000, says it has never had an incident where customers’ money was stolen from their accounts. “We can further confirm that the bank’s system maintains updated and traceable records of every activity and transaction that happens in customer accounts,” its spokesperson, Boga Chilinde-Masebu, told The Botswana Gazette yesterday. “That on its own makes it highly impossible for anyone to tamper with customer accounts,” she said.
“Occasionally, some customers report that money is missing from their accounts. However, upon investigations, it is revealed that the money has been spent by the customers themselves or debited from their accounts to settle some bank charges. In some instances, the bank has had customers complaining of missing funds only to find that the money has been debited to pay their online third-party agreements that they entered into with various vendors locally or internationally.”