The South African Banking Adjudicator — A Brief Overview

• Jurisdiction: South Africa
• Published date: 03 September 2019
• Pages: 38-53
• Citation: (2000) 12 SA Merc LJ 38
• Author: W G Schulze
• Date: 03 September 2019

The South African Banking Adjudicator—

A Brief Overview

WG SCHULZE

University of South Africa

1 Introduction

In the wake of the general hype of transparency and democracy which

has flooded our country since 1994, came the appointment of a number of

ombudsmen in the financial services sector. These included ombudsmen

for the banking; short-term insurance; life insurance; and pension funds

(see Tamara Cohen 'The Insurance Ombudsman — An Alternative

Dispute Resolution Forum for the Insurance Industry' (1996) 8

SA

Merc LJ

252 at 258; and at

http://www.fsb.co.za

(consulted on 3 Dec

1999) for the practices and procedures of the pension-fund adjudicator).

In passing, one or two comments on the term 'ombudsman'. It has its

origin in the Swedish word for 'commissioner' and means 'representative'

in Swedish. The term 'ombudsman' (plural: 'ombudsmen') generally

connotes an official who investigates citizens' complaints against the

government or its servants, or consumers' complaints against the officials

involved in certain industries. In Britain an ombudsman is also referred

to as a 'parliamentary commissioner' (see Marian Makins (managing ed)

Collins English Dictionary and Thesaurus

(1993) sv 'ombudsman').

Prior to November 1997, when the first Banking Ombudsman took

office, the Chief Executive Officer of the Banking Council of South Africa

performed the function of mediator between bank and customer. This

situation was described by a cynical journalist as tantamount to 'putting

Dracula in charge of the blood bank' (see Charl Cilliers

Inaugural Report

of the Banking Ombudsman

(1999) at 4). The Banking Council realized the

need for an impartiality and independence and asked Mr Charl Cilliers to

set up the Office of the Banking Ombudsman. In November 1997 he

became the first Banking Ombudsman. Initially appointed for a twelve-

month period, his period of office had since been extended with a further

six months. In 1999 Mr David John was appointed as the second Banking

Ombudsman with effect from 1 October 1999 (see The Banking Council

of South Africa 'The Structure and Powers of the Office of the Banking

Adjudicator'

(Recommendations Proposed by the Steering Committee to

the Board of Directors of the Banking Council, and Approved at the

Banking Council Board Meeting on 19 August 1999)

(1999) in par 20.1

(hereafter 'Banking Council')).

In a spirit of gender sensitivity, the name of the office has recently been

changed from 'Banking Ombudsman' to 'Banking Adjudicator' (see

Banking Council op cit in par 1.4) It is interesting to note that in a recent

consultative paper prepared by the Financial Services Board, the

38

(2000) 12 SA Merc LJ 38

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THE SOUTH AFRICAN BANKING ADJUDICATOR - A BRIEF OVERVIEW

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39

draftsmen (-persons?) specifically mention that they — quite correctly in

my view — preferred to use the term 'ombudsman', being the

'international accepted non-gender specific name of an alternative

dispute resolution office, in favour of the previously used term

"ombudsperson"' (see Financial Services Board 'Proposal on the

Future Constitution, Role and Function of Ombudsmen in the Financial

Services Sector' (Consultative Paper published on 26 July 1999) in par 2.1

(hereafter 'FSB'). (See also Josephine Dawn Didcott

Why the Term

Ombudsman Should Not Be Changed

(1999) (unpublished memorandum)

where she convincingly argues that the term 'ombudsman' has no gender

bias in the English version of it.) Be that as it may, the 'Banking

Adjudicator' it shall be. I may just hasten to add that any reference in this

analysis to the male gender includes the female gender, and any reference

to the female gender likewise includes the male gender.

The purpose of this analysis is three-fold. First, I will present a broad

outline of the Code of Banking Practice which has been proposed by the

Banking Council of South Africa and which will come into operation

shortly. Closely linked to the Code of Banking Practice are the activities

of the Banking Adjudicator who will have to interpret and make

recommendations on this Code in the course of his day-to-day functions.

I will therefore also provide a cursory view of the purpose, powers,

jurisdiction and structure of the Office of the South African Banking

Adjudicator. Secondly, I will refer briefly to the structure and powers

of the Australian Banking Ombudsman Scheme, as well as the Terms of

Reference which determines the powers and jurisdiction of that

Ombudsman. Thirdly, and closely related to the activities of both the

South African Banking Adjudicator and the Australian Banking

Ombudsman, are the interpretation and content of the concept of

'good banking practice'. I will therefore also briefly discuss the juristic

nature and requirements of a 'banking practice' or 'trade usage'.

Finally, I will argue that the Commentary written on the Australian

Banking Ombudsman's terms of reference as to what constitutes

'good banking practice', may fruitfully be consulted by the South African

Banking Adjudicator.

2 The South African Code of Banking Practice

A South African Code of Banking Practice (the 'Banking Code') has

recently been drafted and will be implemented on 3 April 2000 (see at

http://www.banking.org.za

,

consulted on 3 Dec 1999). This Banking Code

is based on the Banking Code (3 ed, March 1997) of the British Bankers'

Association (for a brief discussion of the British Banking Code, see Ross

Cranston

Principles of Banking Law

(1997) at 168-170). In terms of

the Banking Code member banks have accepted the jurisdiction of the

Banking Adjudicator to make binding

rulings

based

on the law

where that

is appropriate, and

recommendations

based

on the Banking Code.

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