Bankers taking service seriously

By PAULA OLIVER

Banks are pushing extra resources into their customer complaints services as their industry faces an unprecedented level of public scrutiny.

Already an increasing number of customer satisfaction surveys have - sometimes painfully - exposed what people think of their banks.

Now the Banking Ombudsman has joined in by revealing for the first time the number of complaints she has received about each bank.

The new level of transparency is being backed by consumer advocates, who say it signals a big shift from the way "mysterious and imposing" banks operated 15 years ago.

And it appears to be playing a part in forcing banks to take complaints and service more seriously.

"For the first time, this year I'm able to give all banks a reasonably clean bill of health on their own complaints processes," Banking Ombudsman Liz Brown told the Herald. "I can say very firmly that the banks have improved their own internal complaints processes immensely over the years."

Brown has been at the helm of the ombudsman's office for eight of its 11 years, and she has just been reappointed for a further three years.

She has seen a change in the way that banks view complaints.

"Some years ago one or two banks tended to manage the complaints in the legal department, which led to a litigation approach, a very defensive approach. I don't think any bank is doing that now. Complaints are being handled more as a customer service issue, and by people with dispute resolution skills who are keen to resolve them."

That said, the ombudsman's office still received almost 4000 written or telephoned complaints and inquiries about banks over the past year.

Many gripes had not been through the relevant bank's internal complaints process, so were diverted that way.

But 378 had been through that process and were still locked in a stalemate. Westpac scored highest in the dispute stakes with 144 - more than double its nearest rival, ANZ, on 64.

The impact of having these figures and other customer satisfaction surveys made public is not lost on bank bosses.

Westpac chief executive Ann Sherry said she had spent time "sorting out" the bank's complaints process this year and had worked to reduce the number of complaints going to the ombudsman.

"It's taken us quite a long time to deal with the backlog of issues we have. All of it sounds incredibly unsexy, but it's really at the heart of getting the engine of the place in the right direction."

At ANZ, local boss Greg Camm views every written complaint that comes into the bank.

ANZ has been lambasted in customer satisfaction surveys in recent years, but it has significantly reduced the number of complaints against it going to the ombudsman.

As with Westpac, its customer satisfaction ratings are also picking up - although they still sit well below competitors in many areas.

Brown says she was surprised by how supportive banks were of having their level of complaints revealed for the first time.

"I went through an extensive consultation exercise, and I found that virtually all of them immediately agreed. Those who had some reservations accepted it.

"It adds to the transparency, and gives a slightly different perspective to the other information that is out there."

Brown says that banks have beefed up their internal complaint processes since the ombudsman's office was launched.

"In the very early days of the scheme, pretty well half of the complaints we referred back to banks came back to us unresolved. Now it's probably not more than 20 per cent."

The motivation for that is more than just image.

The ombudsman's office is funded by banks on a percentage-of-complaints basis - so the operator with the most unresolved gripes pays more to keep the office going.

"That's an incentive to sort things out," said Claire Matthews, senior lecturer at Massey University's Centre for Banking Studies. "The only control they have over how many complaints go to the ombudsman is through sorting out the complaint themselves."

The ombudsman's office was set up by banks 11 years ago. Brown says she is sometimes questioned about her independence, given the source of her funding, but that tends to come from people who are not happy with the outcome of an investigation.

"People question everything from my independence to my parentage if they're not happy," she laughs. "The banks know I'm independent."

The office's recommendations are almost always accepted by banks, meaning it is unusual for Brown to have to make a legally binding award of compensation.

During the past year her decisions have led to more than $750,000 coming out of bank pockets and going to those who complained. Apart from dealing with gripes, Brown has also been involved in revising the Code of Banking Practice, subscribed to by the main industry players.

The code outlines minimum standards of good banking practice and explains some of the do's and don'ts of operating accounts - such as don't use your birthdate as your PIN.

The number of complaints going to the ombudsman's office has increased markedly since its inception.

Many believe this is because the office is more visible, not because the banks are getting worse.

Consumers' Institute chief executive David Russell backs the concept of an ombudsman and a code of practice over regulation.

"It can keep pace with change better than formal regulation. As new banking services develop they can be included in the Code of Practice."

Regulations or laws could take years to change.

Strange but true case of the stolen house

The strangest case Banking Ombudsman Liz Brown has ever encountered is the one she describes as "the stolen house".

Mr and Mrs D were $40,000 behind on their loan repayments and eventually their bank informed them it would start to try to sell the property.

In September, the bank accepted an offer to buy the property from Mr V, with settlement to occur in December.

In November, however, Mr V sold the house on the property, and it was removed from the section.

The bank was not aware the house had gone. Mr and Mrs D knew, but assumed it was all right because they knew the settlement date was near.

Mr V failed to settle on the agreed date and despite several extensions a settlement was never reached. He was eventually declared bankrupt.

Mr and Mrs D started receiving large rates bills, and discovered they were still the legal owners of the property - but it didn't have a house.

The ombudsman

* The Banking Ombudsman scheme was created in July 1992 as an independent arbitrator in disputes between banks and their customers.

* The ombudsman is appointed by, and responsible to, the Banking Ombudsman Commission, chaired by Sir Ian Barker, QC.

* The scheme is funded by participating banks - there are 12 at the moment. The more unresolved complaints a bank has, the more it must pay to fund the ombudsman's office.

* The ombudsman can award compensation for losses up to $120,000, but not punitive damages.