The Banking Mohtasib has received 594 formal complaints against various banks during the year 2005, out of which 154 were rejected, 130 were declined while 95 were granted.
The amount over Rs 14.711 million were granted during the said period against the claimed amount of over Rs 22.233 million while Rs 981827 were also granted to the complaints in account of compensation.
This was announced by the Banking Mohtasib Pakistan (BMP), Azhar Hamid while briefing the press about the Annual Report 2005 at his office here on Tuesday.
Azhar Hamid said that a total of 215 complaints were in pending on December 31, 2005, while over 650 formal and 200 informal complaints against various banks have been received during the first six months of the current year (January to June 2006).
He said that there are 39 scheduled banks in Pakistan with over 7300 branches throughout the country. Banking Mohtasib entertains two types of complaints first informal ie walk in, e-mail or telephone complaints and second formal written complaints. In the case of informal complaints, Banking Mohtasib provides procedural guidance to complainants and occasionally where warranted, request banks informally to resolve the issue, he added.
During the eight months of operation, more than 250 such informal complaints were received. Giving an example of an informal complaint the Banking Mohtasib said that in 1995 an individual in Quetta lost Travellers Cheques worth $10,000. Bank declined refund and the customer approached the Banking Mohtasib.
"We formally contacted a senior bank executive for assistance and the complainant received $10,000 within a month of making contact with the Banking Mohtasib", he added.
He said that a total of 95 complaints or 16 percent of the total complaints received by the Banking Mohtasib were 'granted' (decided in favour of the complainants).
"In handling complaints, our primary aim is to resolve grievances amicably through a process of reconciliation", he said and added "after analysis, which may include scrutiny of branch records, we send informal recommendations to banks on how best to settle a dispute."
Should banks challenge our recommendations, they are provided an opportunity of a formal hearing in terms of Section 82D (3) of the BCO before an order is passed. It is satisfactory to report that of the 95 granted cases, only one formal order was issued. All others were resolved on the basis of informal recommendations made by the Banking Mohtasib.
He said that more complaints were received around 40 percent regarding consumer products, following frauds, service inefficiency and service rules related issues.
He said in most cases, a grievance reaches Banking Mohtasib after protracted correspondence between complainants and banks, however, it is encouraging to note that in general, the attitude of banks in responding to investigations and enquiries by Banking Mohtasib has been positive with some banks demonstrating a noticeable willingness to resolve issues and find solutions to disputes.
Regarding service culture he said upon scrutiny of correspondence between banks and complainants exchanged prior to the lodgement of complaints with Banking Mohtasib and based on a study of events which initially caused the dispute, it was found that may banks are lacking in sales and service culture and service standards leave much room for improvement.
It was noticed that many banks adopt an indifferent approach to the complaint resolution process. The stand usually taken is defensive in nature with little effort made to investigate the core issues, he added.
He pointed out that the State Bank of Pakistan (SBP) has repeatedly asked banks to establish complaints handling cells as well as recommending response time lines.
Whilst banks have indeed established such cells, these would appear amongst some of the larger banks, to be unstructured and with insufficient empowerment. Given the growing size of banks' customer base and product range, banks would be well advised to focus sharply on quality assurance through innovative customer care initiatives and training.
He said that the SBP continues to monitor service efficiency at bank and, where necessary, facilitates introduction of new products and services geared towards customer convenience. Many grievances received at the Banking Mohtasib related to ledger fees and minimum balance requirements, primarily from low income account holders.
Unfortunately these had to be rejected outright since such stipulations fell within banks' schedule of charges. To address the issue, regulatory intervention became necessary and the recent SBP Basic Banking Account initiative will go a long way towards alleviating the suffering of low income account holders.
SBP's constant vigil together with the establishment of Banking Mohtasib should provide further momentum to the banking industry in its service quality initiatives which augers well for the consumer base within the country.
He said that the sample size may be insufficient to lend to a meaningful assessment of systemic issues, however an indication of potentially thorny areas can be obtained through analysis of the types of complaints received, both formal and informal.
The ensuring section highlights some of the systemic weaknesses and poor banking practices which have given rise to disputes between banks and their customers and which nipped early through regulatory intervention, could remove areas of dissent in the future.
Regarding credit card fraud, he said that credit card issuers do not accept liability for card misuse unless a loss report has been lodged prior to misuse date. This is understandable because of instances of unscrupulous customers having notified card loss soon after having made transactions and then lodging claim for fraudulent use of card.
It is also part of established practice that authorised merchants assume little or no responsibility in respect of fraudulent card use at their stores. Lack of consumer awareness and negligence also accounts for credit card related mishaps.
"We have recommended to the SBP that card issuers in Pakistan be asked to give serious consideration to the issuance of PIN based credit cards in order to provide additional security and protection to a rapidly growing credit card base," he said.
Regarding Credit Card - statement, he said, "We have recommended to the SBP that all card issuers be asked to introduce round amount credit card billing in order to avoid needless acrimony in the future."
The Banking Mohtasib also recommended to the SBP that in order to protect potential customers, all banks involved in door to door sales calls should be required to establish a quality assurance unit which will make sales verification telephone calls to all customers who have signed up for a bank product through external sales persons, he said and added that the telephone calls should be made immediately after signed documents are submitted for processing to the bank by sales persons.
The caller should ascertain customer understanding of the product and obtain details of any commitments made by the sales persons. A record should be made of the telephone contact in the relative file.
"We have also recommended to the SBP that banks be asked to amend letters of lien and other such legal documents of pledge, by deleting all such clauses which dispense with the requirement of prior notice of sale of pledged or under lien, securities." he said. Such clauses are more than likely to mislead officers of banks into unwittingly contravening the law to the banks' ultimate detriment.
"We have also recommended to the SBP that the two switch operators develop a robust service level agreement to encourage accountability and timely resolution of ATM related disputes", the Banking Mohtasib said and added " we have also recommended to the SBP to make it incumbent upon banks to (a) send quarterly account statements at nominal cost, at least quarterly, or more frequently as required by the customers to facilitate regular reconciliation and (b) implement and enforce staff rotation policies at least for senior branch staff."
Implementation and regular audit of these steps should considerably reduce the element of internal fraudulent activity in the future, he said.