/ 31 July 2015

Clients, staff can’t afford to bend bank’s Golden Rules

The 2006 forensic report prepared for Zuma's trial that never saw the light of day ... now made available in the public interest.
The outcome of the ANC’s long-awaited KwaZulu-Natal conference was a win for the Thuma Mina crowd. (Delwyn Verasamy/M&G)

Banks periodically remind their customers of their duty to prevent fraud by, for example, never letting anyone know what their PIN number is. But what do banks do on their side, to protect customers?

A recent decision of the Labour Court in the case of an employee who linked a customer’s account to four new accounts makes it clear that if a staff member doesn’t follow the bank’s standard rules for preventing fraud by verifying signatures and identity, then the bank will have good grounds to sack the employee concerned.

In this case, First National Bank wanted the court to reconsider the decision by the Commission for Conciliation, Mediation and Arbitration (CCMA) that reversed the bank’s dismissal of Nomsa Patricia Maki and instead ruled her dismissal was unfair.

Maki had a job as an “external sales consultant”, and her duties included opening new bank accounts. Her job was on the line when it emerged that she had linked four accounts to that of Nnite Trading, but she authorised the links without verifying the signatures involved — a breach in security that ultimately led to a loss of R355 000 to the account holder.

FNB gave evidence that because of the inherent risks in its business it has put in place a number of procedures to “ensure the security of all monies and negotiable instruments in its custody”. Crucial to all this is the set of prescribed internal rules referred to by the bank as the “Golden Rules” and consumers would do well to ensure these are all followed. 

The linking of accounts is one point at which security is critical because, “once an account is linked without authority, it is a licence to commit almost unlimited fraud”.

The Golden Rules include the following: the customer’s ID must be seen and the face of the customer must be compared with the face in the ID; the ID document must itself be checked to make sure it is authentic; and certain security questions must be asked and the answers checked. 

The bank’s eGami system must be used for the next steps. This computerised system captures details of customers. It enables bank staff to view copies of the customer’s identity document and signature card with a specimen signature.

According to the Golden Rules, a customer’s imaged signature card must be viewed on eGami for verification, but if that system is down or the image of the signature card can’t be accessed for some reason, then the original customer file or signature card or the initial mandate must be checked instead.

FNB investigated its customer’s complaint and found the account revealed fraudulent transactions that benefited four different accounts. Maki was responsible for linking all four of these accounts to Nnite Trading, but she hadn’t observed the Golden Rules: the signature in the eGami system did not resemble the signature of the person who asked for the accounts to be linked.  

Called to a disciplinary inquiry, Maki’s said she hadn’t been properly trained. She said that she had been trained simply to request that a customer signed his or her signature in front of her. That, she claimed, was what she had been told would constitute “signature verification”. 

During the CCMA hearing the bank called this ridiculous and illogical and pointed out that such a step would verify nothing. The commissioner, however, accepted Maki’s argument and said it wasn’t her fault if she had been taught differently.

The Labour Court, on the other hand, accepted FNB’s argument ruling that the commissioner had failed to consider the inherent probability of Maki’s version. Acting Judge Edwin Tlhotlhalemaje said the procedure Maki claimed to have been taught “would not have served any purpose in so far as security measures were concerned”.

It would also not have made sense for her to have been trained in a way that was different from everyone else, said Judge Tlhotlhalemaje, who set aside the commissioner’s original finding and instead ruled that Maki’s dismissal was fair.

There are lessons here for both customers and bank staff. Bank staff cannot afford to ignore the Golden Rules — and we as customers cannot afford to let them.