Ombudsman set to name and shame banks

Businesses will soon be on a better footing with banks and other lenders, with the Financial Ombudsman Service planning to publicly name and shame the worst offenders.

For the first time, the institutions with the most customer complaints for sloppy service, excessive charges and misleading information will appear on a public list.

The Ombudsman says further details of the list will be published in its annual report, although it cannot confirm when this will be released.

The FOS received 19,107 complaints in the 2008/09 financial year, a 33% spike compared with the previous 12 months.

Consumer Credit Legal Centre deals with 16,000 banking complaints each year and another 1,000 involving insurance companies.

The centre says it has seen a huge increase in complaints regarding mortgage hardship and repossessions, with National Australia Bank proving the worst offender.

Peter Strong, executive director of the Council of Small Business of Australia, welcomes the Ombudsman’s naming-and-shaming tactic, saying the banks have been a law unto themselves for too long.

“If you’re looking for a business loan, basically you won’t get one – it’s almost a rule,” he says.

“If you’re going to start your own business and you’re looking for money, [a public list will allow you to] go and find a benevolent bank manager who understands what you need.”

Strong says the move will also give banks an opportunity to defend themselves should they appear on the list.

“I like the thought that the banks are going to be put in a position where they have to defend themselves rather than waiting for everybody else to find information to prove their concerns,” he says.

However, the Australian Bankers’ Association chief executive Steven Munchenberg is concerned the information might be misleading.

“For example, if the Financial Ombudsman Service (FOS) simply released the number of complaints, without taking into account that some financial institutions have many more customers than others and that some financial institutions process a greater volume of transactions than others, than the information will be misleading,” he says.

“Provided this contextual information is taken into account, then the FOS or the Australian Securities and Investments Commission could provide data which would provide a true picture of complaints against banks, building societies, credit unions, insurance companies and financial planners.”

“It is important to note that in the last FOS annual report, 93% of cases were resolved early by banks.”