IF your bank account details land in the hands of your business rivals or criminals, you better go straight to your bank and check what has to be done to protect the account’s secrecy.

And before wondering on this unsolicited advice, please consider this: not only 44 out of 46 banks have outsourced the dispatching of statements of account (which, by the way, is allowed by the central bank), 23 of them ‘have even outsourced printing of SOAs,’ reveals a SBP report.

So, what’s the SBP’s take on it? “The effectiveness of controls here plays the most vital role in ensuring secrecy and fidelity of consumers’ information.” That’s it.

This has come to the fore after a survey was conducted by the central bank’s consumer protection department. The department had sent a questionnaire to 46 banks, asking them to tell the central bank about their consumer service practices.

The report, prepared after an analysis of the banks’ responses, says protecting customers’ personal and confidential data is an internationally recognised best practice, aimed at blocking the possibility of its unauthorised access.

‘We live in a problem-fixing, bug-busting culture. Regulators use vague words to pacify the end-users of a service, but leave enough space for wrongdoers to find a safe exit’

The SBP has already asked banks to devise protection systems for their customers and implement them from July 1, 2015. While central bankers keep addressing some complaints of bank customers, the office of the Banking Ombudsman is also actively engaged in resolving such grievances.

Meanwhile, one important finding of the report is that 75pc of banks do not offer stand-alone ATM cards to customers. Instead, they club debit card features with ATM cards “mostly without explicit procedures of acquiring the customers’ consent first”.

Complaints related to ATM cards are not only common, but are on the rise. In 2013, the Banking Ombudsman’s office received 660 ATM-related complaints, representing about 16pc of consumers’ overall grievances against banking services that year.

The SBP has lately accelerated its financial consumer protection initiative and its report highlights weaknesses in banks’ customer services. It has already asked banks to develop their own framework for financial consumer protection.

Proper market research is a must for launching new financial products, and a majority of banks seem to be following this cardinal rule, according to the SBP report. However, some do their research after offering the products, while half a dozen banks apparently do not conduct product suitability assessments at all.

Lack of such assessments could be a key reason for customers’ complaints, but there could be many more. Banks are required under a 2004 SBP ruling to have internal set-ups for handling complaints. The SBP report notes that 78pc of banks have dedicated divisions/departments/units for handling complaints, while 22pc have other arrangements in place.

In FY14, banks received 660,000 complaints and addressed all but 3,000 of them. More importantly, most banks resolved the issues highlighted in these complaints within 15 days.

While appreciating this, the central bank’s report points out that in most banks, service quality management is part of retail banking. “While such a set-up may facilitate quick resolution of complaints, it may affect unbiased and fair treatment of complaints,” it says.

Internationally acceptable good practices require that banks’ internal dispute resolution mechanisms be fair, transparent and efficient enough to ensure resolution of complaints within the minimum possible time.

Besides, such mechanisms should be ‘visible and accessible to all types of customers’ and be ‘integrated into the core business’ of banks.

More importantly, banks’ senior management must give due consideration and importance to the functioning of their dispute resolution systems.

According to the report, one area where banks treat customers fairly well is the handling of dormant accounts. Seventy-two per cent of banks inform their customers in writing that their accounts have become dormant, while 22pc tell customers about it when they attempt to make a transaction; 2pc prefer to write emails, and 4pc adopt other methods.

Similarly, when a customer wants to get his dormant accounts reactivated, 76pc banks require him to go to the bank branch and personally file an application for this purpose.

The SBP report appreciates this prudent approach, but recommends that banks find some ways to make things easier for “customers under extraordinary circumstances, like paralysing health conditions”.

But customers generally remain critical of banking services. “This is because all efforts to discipline banks are not fired with the spirit of protecting the weak from the excesses of the strong,” replies a former SBP executive director. “Sometimes, these efforts are superficial.”

Secondly, not much is being done to prevent the repetition of a mistake. “We live in a ‘problem-fixing, bug-busting culture’. Regulators use vague words to pacify the end-users of a service, but leave enough space for wrongdoers to find a safe exit.”

Published in Dawn, Economic & Business, November 10th, 2014