Ten banking mistakes and how to avoid them
Twenty-five years ago, bank customers raised complaints about cheques and passbooks. Now they are worried about online banking, apps, and mobile payment technologies, says Banking Ombudsman Nicola Sladden.
But she said the goal for her office, which has been operating for a quarter of a century this month, had remained the same - to promote higher standards in the banking sector, and build consumer trust.
Over the past year, the scheme received 2727 inquiries, and dealt with 619 complaints and 153 disputes.
Most of the disputes were about the country's biggest bank, ANZ, followed by Westpac.
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Westpac had the most cases ruled in its favour.
Across the board, the Ombudsman scheme backed banks most often.
Sladden said there were 10 things that customers could do to give them a better banking experience.
Know what you are signing up to
Sladden said her office often saw cases where people were caught out by things they had agreed to.
Home loan cash incentives are an example of this.
Many banks have offered thousands of dollars to tempt people to take out loans with them.
But it is common for the bank to want that money back if the loan is repaid early or moved to another bank.
The Ombudsman has received a number of complaints about banks enforcing their ability to do this. "Knowing what you agree to can save you time, money and hassle," Sladden said.
Keep your paperwork
"Even in the digital age, there is still a role for paper. While a bank does usually keep good records, these often only go back so far, and may not always cover what you are looking for. It's best to keep your own records," Sladden said.
Scan your documents and use cloud-based storage platforms to store copies of important documents.
Cheapest isn't always best
"Everyone loves saving money. But sometimes, cheapest isn't always best. For instance, we see people relying on automatic benefits that come with a banking product, such as travel insurance, without understanding the limits and switching insurance to a cheaper premium that does not give the same extent of cover," Sladden said.
In one case Sladden's office dealt with, a customer travelled overseas relying on his credit card's insurance policy.
But he did not realise that it only applied to trips shorter than 40 days. He was away for 100 and had his claim declined.
In another, a customer switched to a bank house insurance policy but when he claimed it was declined because the policy did not cover earthquake damage to retaining walls.
Look out for your friends and family
Sladden said the scams seen by her office were becoming more sophisticated.
"Did your family member just meet a prince online? Did they just inherit a million dollars from a previously unknown relative? Watch out for your friends and family and let them know when something could be amiss."
Be cautious with returns
Chasing returns can be a bad idea because just because one investment provider did well this year, it does not mean they will stand out in the next.
"Often long-term performance has ups and downs, but simply sticking to your guns works out better in the long run," Sladden said.
She said people were also caught out when they put money into term deposits, looking for higher returns, but then needed to access it. "Seek financial advice before making any hasty decisions."
Sladden said people often forgot about their auto-payments. That meant payments bounced or they ended up accidentally out of pocket.
"Remember to cancel automatic payments when they are no longer needed. Otherwise you could be stung with fees and struggling to get the money back paid in overpayments."
Payment processing times have dropped dramatically, which Sladden said created its own problems.
There were now more mistaken payments, and when people were caught up in scams it was sometimes harder to claim back the money or stop the payment in time.
Have emergency money
"Some of the saddest cases we see are those where high-performing companies have something go wrong and, even though they are profitable, they run out of cash. It is never a bad idea to build up reserves as a buffer in case you crash the car, get burgled, or just have a bad month," Sladden said.
Do due diligence
Don't get complacent about where you put your money.
"A bank will assess the lending situation before lending you money. This doesn't, however, remove your need to do your own due diligence. Often we see investments go wrong where the customer says the bank should have noticed that the deal was too good to be true. Unfortunately this is rarely the case<" Sladden said.
Whatever stage of life you are at, it helps to have a plan for things taking an unexpected turn.
"Planning ahead can avoid many issues," Sladden said. "This is especially true for those of us getting older. Who will manage your finances when you can't? How will you cope if interest rates go up? How much will that new car cost in the long run?"
Don't ignore the rough stuff
If you strike trouble, the worst thing you can do is bury your head in the sand.
"Ignoring a bill will rarely make it go away. We often see cases where people get overwhelmed by difficult situations so don't do anything about them, which ends in debt collection and escalating demands," Sladden said.
"We get that sometimes things get too much, but instead we suggest you talk to the people you owe, and negotiate a payment plan."