Banks urged to disclose errors

THE FINANCIAL Regulator has told banks and insurance companies they should disclose overcharging incidents rather than wait for the media to find out about them.

Proactively bringing issues to the attention of the media, rather than waiting for them to come into the public domain, can prove beneficial in the longterm, the regulator says in a letter sent to the institutions.

Its advice follows an investigation of the way banks and insurers manage and correct charging errors, and how they inform the regulator and customers of such incidents. Recent years have seen a number of major overcharging incidents in which banks were forced to repay sums of money to thousands of customers.

The investigation found that institutions are generally adhering to the regulator’s consumer protection code and its requirement for them to correct errors speedily, efficiently and fairly. They have procedures in place but generally deal with charging errors on a case-by-case basis.

The regulator has advised each institution to maintain a central log of all errors to ensure that systemic faults are recognised. These error logs will be subject to inspection by the regulator.