If a bank messes up and customers lose money, does the bank have to refund them even if they don't complain?

The long answer

Thank you for your email about the Capitec IT glitch on 15 July 2023 which resulted in the bank not paying your credit card bill in full on the agreed day, which then resulted in your being charged more than R700 interest on the outstanding amount of the credit card bill. After numerous attempts to get the bank to sort it out, you were able to get the interest refunded by the bank after you had reported it to the banking ombudsman and they had in turn referred the complaint back to the bank, as they are required to do before registering it as a complaint to be handled by the ombudsman. You asked the bank if it had restored the financial losses of all the other clients who were affected by the 15 July IT glitch, but you have not received an answer from the bank. You would like advice on how to pursue a class action suit against the bank in the interests of justice for all the other clients.

As you say, this sort of thing has happened at Standard Bank before too (a systems failure on 24 May 2022) and is one of the reasons you transferred your account to Capitec.

From a headline by Business Day on 5 August 2022, Capitec to refund all bank fees incurred during two-day outage, it seems that there was a two-day outage at Capitec on 5 August 2022: “Capitec has pledged to refund all banking fees incurred during a two-day systems outage caused by what the bank described as infrastructure problems with its central servers that support its banking channels.” By 7 August, Capitec said it had processed all delayed payments to and by clients.

Whether this has been done now for all the clients affected by the 15 July 2023 outage remains unclear.

Your point is that these clients may well be what the banking ombudsman terms ‘vulnerable clients’ defined as “someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care.”

The ombudsman identifies vulnerable clients as people over 65, people who have recently suffered the death of a loved one, people who are discriminated against, or are not financially literate.

Vulnerable clients may be unable, or at best, unlikely, to demand that the bank make good their losses, which as you say, may be individually small losses, but amount to a lot of money collectively, which the bank should refund.

The question you are raising is whether the bank is legally obliged to automatically make good on all financial losses to all clients, even when these clients have not reported the losses.

I would say, yes, they are obliged to make good all losses whether they receive complaints or not. The ombudsman says below in https://www.obssa.co.za/case_studies/incorrect-payment-banks-failure-to-act-timeously-customer-service-breakdown that the following principle applies: “When placed in a position to mitigate a customer’s loss, the bank has an obligation to ensure that it does all that is necessary to assist the customer. Any failure on the part of the bank will result in the bank being held liable for the loss that it was in a position to prevent.”

But in the Capitec case, the question is whether the bank is actually doing this automatically or whether it only gets to it when it receives a complaint. What you are asking is that the bank work out what is owed to everyone from the 15 July 2023 glitch, communicate with each client and refund them, rather than each client having to take it up with the bank individually.

We asked Capitec about the 15 July problem. We also asked: "What about people who didn't notice the error or didn't complain? Does Capitec ensure that the additional interest charged to their credit card accounts is reversed?"

We further asked: "In general, when a bank error occurs and results in an expense to clients such as this which is not their fault, does the bank  ensure that any loss or charge is reversed with no prejudice to the clients?"

Capitec responded:

"On 15 July 2023, some of our clients faced system issues that affected our collection process. Capitec is committed to collecting payments as per the agreed dates, but occasionally, factors beyond our control, like banking and salary payment systems, can lead to delays.

In such cases, collections might be moved to the next business day, typically Monday since there are no collections on Sundays. We're attentive to client concerns and will address them as they arise. Rest assured, we track affected clients and automatically rectify errors on their accounts."

In terms of what the ombudsman can do, Reana Steyn, the ombudsman, says that complaints from customers who contact the OBS about a dispute which has not been considered by the dispute department in the bank are known as premature complaints. The OBS assists consumers to log the complaint, refer it to the relevant bank and it is either satisfactorily resolved by the bank or converted into a formal complaint. Complainants also need to allow the bank 20 working days in to respond to the complaint. Finally, complainants need to obtain a written response from their bank

Thus, the ombudsman can only take up individual complaints and only after the bank has failed to resolve the complaint.

Wishing you the best,
Athalie