Grievances: Bullying in the name of debt collection
Banking ombudsman says banks disregarding SBP’s guidelines
Unusually high year-on-year increases in the number of complaints were witnessed in the categories of ATMs, corruption/malafide practice and breach of confidentiality. STOCK IMAGE
KARACHI:
Banks are “flagrantly” disregarding the State Bank’s guidelines for fair debt collection, according to the banking ombudsman of Pakistan.
Calling the harassment of family members of credit card defaulters ‘legendary’, the annual report of Banking Mohtasib (Ombudsman) Pakistan said such practices – mostly in the cases of credit card and car loan defaults – have gained ‘wide disrepute’.
Established in 2005 under the Banking Companies Ordinance (BCO), Banking Mohtasib (Ombudsman) Pakistan is an independent institution that works to resolve public grievances against scheduled banks and negotiate disputes between banks.
Appointed by the president in consultation with the SBP governor, the ombudsman has the authority to inquire into complaints of banking malpractice, discriminatory actions, violations of banking laws, corruption and inordinate delays and inefficiency.
The ombudsman noted that “uncalled for intimidation” is resorted to during the re-possession of cars. The report added that no prior notice is served upon the defaulter, a practice contrary to the SBP guidelines.
The annual report also presented a case study in which a car was “violently” re-possessed from a woman even though she was on her way to the bank with a prior appointment for the sole purpose of paying off the entire outstanding loan.
The number of complaints resolved through the office of Banking Mohtasib Pakistan decreased 44% to 904 in 2014. It had resolved a record number of 1,637 complaints in 2013, thanks to the appointment of the banking ombudsman after a gap of 10 months that year.
Banking Mohtasib Pakistan received 3,569 ‘informal complaints’ in 2014 and managed to address and dispose of 3,508 of them by the end of the year. Informal complaints refer to complaints submitted without adopting procedures laid down in the law, such as approaching the defendant bank in writing before contacting Banking Mohtasib Pakistan. The number of informal complaints received in 2013 was 3,147.
The monthly average of informal complaints received in 2014 was 297, which translates into an increase of 13.3% over the monthly average of 262 during 2013.
The number of formal complaints - ones that are submitted through a prescribed complaint form and attested by an oath commissioner after a notice has already been served on the bank - that Banking Mohtasib Pakistan received in 2014 was 937. It reflects a monthly average of 78 formal complaints, which is down 14.1% over a total of 1,091 in 2013 with a monthly average of 91.
The number of complaints, including both formal and informal ones, received in 2014 increased to 4,506, up 6% compared to the preceding year.
Most complaints that Banking Mohtasib Pakistan received in 2014 were about either services inefficiency/delays or ATMs. These were followed by complaints regarding advances, loans and deposits, consumer products and fraud.
Unusually high year-on-year increases in the number of complaints were witnessed in the categories of ATMs, corruption/malafide practice and breach of confidentiality. About 64% complaints received in 2014 under the consumer products category were related to credit cards alone.
The highest number of complaints (165) was received against National Bank during 2014, followed by Habib Bank (164), United Bank (144), MCB Bank (89), Standard Chartered Bank (65) and Bank Alfalah (58).
Published in The Express Tribune, June 24th, 2015.
Banks are “flagrantly” disregarding the State Bank’s guidelines for fair debt collection, according to the banking ombudsman of Pakistan.
Calling the harassment of family members of credit card defaulters ‘legendary’, the annual report of Banking Mohtasib (Ombudsman) Pakistan said such practices – mostly in the cases of credit card and car loan defaults – have gained ‘wide disrepute’.
Established in 2005 under the Banking Companies Ordinance (BCO), Banking Mohtasib (Ombudsman) Pakistan is an independent institution that works to resolve public grievances against scheduled banks and negotiate disputes between banks.
Appointed by the president in consultation with the SBP governor, the ombudsman has the authority to inquire into complaints of banking malpractice, discriminatory actions, violations of banking laws, corruption and inordinate delays and inefficiency.
The ombudsman noted that “uncalled for intimidation” is resorted to during the re-possession of cars. The report added that no prior notice is served upon the defaulter, a practice contrary to the SBP guidelines.
The annual report also presented a case study in which a car was “violently” re-possessed from a woman even though she was on her way to the bank with a prior appointment for the sole purpose of paying off the entire outstanding loan.
The number of complaints resolved through the office of Banking Mohtasib Pakistan decreased 44% to 904 in 2014. It had resolved a record number of 1,637 complaints in 2013, thanks to the appointment of the banking ombudsman after a gap of 10 months that year.
Banking Mohtasib Pakistan received 3,569 ‘informal complaints’ in 2014 and managed to address and dispose of 3,508 of them by the end of the year. Informal complaints refer to complaints submitted without adopting procedures laid down in the law, such as approaching the defendant bank in writing before contacting Banking Mohtasib Pakistan. The number of informal complaints received in 2013 was 3,147.
The monthly average of informal complaints received in 2014 was 297, which translates into an increase of 13.3% over the monthly average of 262 during 2013.
The number of formal complaints - ones that are submitted through a prescribed complaint form and attested by an oath commissioner after a notice has already been served on the bank - that Banking Mohtasib Pakistan received in 2014 was 937. It reflects a monthly average of 78 formal complaints, which is down 14.1% over a total of 1,091 in 2013 with a monthly average of 91.
The number of complaints, including both formal and informal ones, received in 2014 increased to 4,506, up 6% compared to the preceding year.
Most complaints that Banking Mohtasib Pakistan received in 2014 were about either services inefficiency/delays or ATMs. These were followed by complaints regarding advances, loans and deposits, consumer products and fraud.
Unusually high year-on-year increases in the number of complaints were witnessed in the categories of ATMs, corruption/malafide practice and breach of confidentiality. About 64% complaints received in 2014 under the consumer products category were related to credit cards alone.
The highest number of complaints (165) was received against National Bank during 2014, followed by Habib Bank (164), United Bank (144), MCB Bank (89), Standard Chartered Bank (65) and Bank Alfalah (58).
Published in The Express Tribune, June 24th, 2015.