Absent watchdog: No banking ombudsman to serve consumers since May

In the absence of authority, no one to address private individuals’ issues with banks.

KARACHI:

The position of the banking ombudsman has been vacant since May, after the three-year, non-extendable term of former Banking Mohtasib (ombudsman) Mansurur Rehman Khan expired five months ago.

According to the Banking Companies Ordinance (BCO), 1962, a banking ombudsman is appointed by the president in consultation with the governor of the State Bank of Pakistan. The ombudsman has the authority to inquire into complaints of banking malpractice, discriminatory actions, violations of banking laws, corruption and inordinate delays and inefficiency.

Senior officials of the Banking Ombudsman Pakistan refused to meet The Express Tribune’s reporter during a recent visit to their office in Karachi. They also declined to answer any queries until the ombudsman was appointed.

The Banking Ombudsman Pakistan was established in 2005 under the BCO as an independent institution that would work to resolve public grievances against scheduled banks and to negotiate disputes between banks. The authority, however, lacks grit. The position of the banking ombudsman had remained vacant for a full year after the first mohtasib completed his term in 2008. Khan was appointed banking ombudsman on May 2, 2009, and concluded his term early this year.

A State Bank of Pakistan (SBP) spokesman offered no comment when The Express Tribune asked him whether the SBP governor was in any way responsible for the prolonged delay in the appointment of the banking ombudsman.

Addressing consumer issues

In 2011, the latest year for which data is available, the Banking Ombudsman Pakistan addressed and disposed off 2,676 out of a total of 2,726 ‘informal’ complaints it received. Informal complaints refer to complaints submitted without adopting procedures laid down in the law, such as approaching the defendant bank in writing before contacting the Banking Ombudsman Pakistan.

The number of formal complaints received – submitted through a prescribed complaint form and attested by an oath commissioner after a notice has already been served on the bank – was 896 in 2011: which comes down to almost 75 complaints per month.

While the number of total complaints in 2011 increased by 13.7% compared to the preceding year, formal complaints witnessed a drop of 14.4% over the same period. Interestingly, formal complaints outnumbered informal complaints in 2005 – the year the Banking Ombudsman Pakistan was established. The gap between two categories has grown steadily since, with informal complaints numbering three times higher than formal complaints in 2011.

Most complaints that the Banking Ombudsman Pakistan received in 2011, 1,017 to be exact, were regarding consumer products. These were followed by complaints regarding the advances, loans and deposits category, which increased by 25.8% to 677 over the preceding year. The highest year-on-year increase in complaints was witnessed in the service inefficiency/delays category, which rose by over 50% between 2010 and 2011.

Over half the complaints received under the consumer products category -- the largest among 17 complaint categories – were related to credit cards.

The bank-wise resolution of 896 complaints received during 2011 for major banks is as follows: 130 complaints were against the United Bank, 122 against Muslim Commercial Bank, 95 against Habib Bank, 83 against Standard Chartered Bank, 80 against Bank Alfalah, 54 against Faysal Bank, and 49 against Allied Bank Limited.

While speaking to The Express Tribune, a professional banker said the high number of complaints against any particular bank should be seen in the context of the relative expectations of its customers. “Nobody expects first-class service at a government-owned bank. So its customers are less likely to approach the ombudsman in case of a perceived malpractice,” he said, while requesting anonymity. “But a foreign bank with a limited number of branches in the country may attract only those customers who are sensitive to bad customer service,” he added.

Published in The Express Tribune, October 6^th, 2012.