Section 7 of the Code of Banking Practice (CoBP) deals with account safety measures. Section 7.6 of the CoBP contains undertakings by banks in respect of Cards and PINs2 as well as responsibilities of customers in this regard.
This section and sections 7.7 and 7.8 (to follow) are very important because they form the basis of the safety requirements, responsibilities and liabilities in respect of losses through the use of payment instruments for both bank and customer.
Cards and PIN
The Bank’s Responsibilities Regarding Cards and PINs
- issue customers with Cards and PINs, passwords or other unique means of identification3 or replace same;
- issue Cards and PINs separately and take reasonable steps to establish if the customer received it. This implies that the card will be issues separate from the document that has the PIN, not together in the same document;
- issue PINs to customers in confidence; and
- tell customers if they can choose their own PINs etc. and how to change them.
The Customer’s Responsibilities Regarding Cards and PINs:
- provide proof of identity when collecting or receiving a Card or PIN;
- keep the PIN, password and other forms of account details or identification secret and never disclose it to anyone – not even bank employees; and
- if a secondary card is cancelled, ensure it is destroyed or returned to the bank.
Customers may request additional cards (secondary cards) if required. Secondary card holders will have their own PIN etc and the main cardholder remains responsible for payment of all transactions – even after the card was cancelled, unless it was destroyed or returned to the bank. The main card holder may request the bank to cancel a secondary card at any time.
Protecting your Account
Section 6.7 provides the basis for most of the Ombudsman decisions regarding ATM fraud, and losses through Card theft, scamming etc.
In this section banks ensure that customers are made aware of what is expected of them in relation to account protection and in the next section (6.8), the banks accept responsibility for losses in certain instances.
It is therefore clear that if the customer did not adhere to the requirements of section 6.7, and there is fraud/theft/losses, the customer may be held responsible without compensation from the bank.
Customers have the following responsibilities
Keep the Bank Informed
Customers must inform the bank of changes to personal information.
Customers have to take care (look after) their chequebook, savings account book, cards, electronic purse, PINs, passwords and other unique means of personal identification in order to prevent fraud.
- not keep the cheque book or PIN and cards together;
- not allow anyone else to use their card, PIN, password or other unique means of personal identification;
- take reasonable steps to keep their card, PIN, password and other unique means of personal identification secret, safe and secure at all times
- never disclose their PIN or password to anybody, including family, friends or any bank employee who offers assistance;
- never write down a PIN or password, and if it has to be written down, keep it safe and disguise it (don’t write down the PIN number in the correct order);
- be alert when using ATMs and electronic banking devices and assess potential risk for muggings, card swapping and criminal activities;
- not use easy to guess PINs – such as birth dates;
- subscribe to receive transaction notifications via sms that may be used to alert unauthorised activity on accounts if their banks offer the service;
- take care when storing or getting rid of information about accounts. People who commit fraud use many methods, such as retrieving statements from bins, to get this type of information;
- treat their electronic purse as cash in a wallet – money left in the “e-cash” part of the electronic purse at the time it is lost or stolen may be lost, in just the same way as if the wallet is lost.
Discovering Potential Losses
When customers become aware of or suspect certain events, they must inform the bank as soon as possible (and keep the reference number as proof of the report.)
These events are:
- cheque book, savings account book, cards and/or electronic purse have been lost or stolen;
- someone else knows the PIN, password, information about the customer’s accounts or personal information or the customer’s other unique means of personal identification; or
- there are unauthorised transactions on the accounts.
Open a Case with the SAPS
The bank may require a customer to open a case of fraud or theft if required – the bank will give all the information required to do this.
Customers may be vulnerable to crime when using certain ATMs and must always look out for and adhere to notices of caution at ATMs.
Banks have the following responsibilities
Publish Contact Details
Banks must publish the contact details to report lost or stolen cards etc. or advise of compromised PIN. The details must be published in statements, at ATMs or other means.
Banks must give customers a reference number when they report losses or compromised information.
Responsibility for Losses
In section 7.8 of the CoBP, the liability issues for losses are addressed. The bank assumes liability for losses in certain circumstances and holds the customer liable in certain circumstances.
When and how may the Bank be Responsible for Losses?
- The customer must inform the bank that a chequebook, savings account book, card or electronic purse has been lost or stolen.
- The customer must inform the bank that someone else knows his/her PIN, password or other unique means of personal identification.
- Once this is done, and the bank has the required information, it will take immediate steps to ensure that the customer’s accounts are not accessed in a fraudulent manner.
AND provided that the customer did not:
- Act fraudulently;
- Act negligently or without reasonable care which has caused or contributed to the loss. This may apply if the safeguards were not followed.
Composition of the Banking Association South Africa
The Banking Association South Africa is an industry body representing all banks registered and operating in South Africa. Currently, The Banking Association has 31 member banks which include both South African and international banks. The Main Board of Directors and Board Executive Committee are comprised of Chief Executives and Heads of Retail, respectively. The Banking Association South Africa consists of five divisions, namely:
- Managing Director’s Office
- Banking & Financial Services
- Shared Services
- Socio-Economic Growth & Development
- Strategy & Stakeholder Management
The Role of the Banking Association South Africa
The Banking Association South Africa is the mandated representative of the banking sector and addresses industry issues through:
- Policy influence
- Guiding transformation in the sector
- Acting as a catalyst for constructive and sustainable change in the sector
- Research and development
- Engagement with critical stakeholders
The broad role of The Banking Association is to “establish and maintain the best possible platform on which banks can do responsible, competitive and profitable banking”. A critical role of The Banking Association is to work with its members to enable this role within the context of the transformation challenges our country is addressing.
The Banking Association South Africa manages numerous committees that advise The Banking Association executive on issues pertinent to the sector.
In addition to the committees, The Banking Association South Africa oversees several business forums, task groups and sub-committees which are interim structures put in place to assist the committees in resolving a particular matter/issue at a given time.
History of The Banking Association South Africa
The Banking Association South Africa has its genesis in the Council of South African Banks (COSAB). In March 1992, four separate associations addressing specific areas of activity in the banking sector were merged to form COSAB. These associations were:
- The Association of Mortgage Lenders
- Merchant Bankers Association
- Clearing Bankers Association
- Association of General Banks
COSAB was a committee-driven structure that was deemed to be inappropriate to address the dynamic issues prevalent in the South African banking sector. In March 1998, under the stewardship of R.S.K. (Bob) Tucker, the leadership of the Banking sector decided to establish The Banking Council South Africa. The Banking Council South Africa was an executive driven body that was structured to address the challenges in the banking sector.
In March 2005, The Board of The Banking Council South Africa decided to change the name of the body to The Banking Association South Africa because this is a more appropriate description of the structure of the body and its role in the South African banking sector.
Mr. Cassim (Cas) Coovadia was appointed Managing Director of The Banking Association South Africa.