The Swiss banking ombudsman's office says it fears receiving a rash of complaints from ill-informed investors when they lose money in the next stock market slide.This content was published on July 3, 2007 - 15:21
Fewer people complained last year than in 2005, with the proportion of gripes over investment advice sinking. But with more complex products coming onto the market, the ombudsman is bracing himself for a surge.
At its annual media conference in Zurich on Tuesday, the independent office said it dealt with 1,467 complaints last year, down from 1,495 in 2005, and had upheld 17 per cent of those it followed up with the banking sector.
It was the third consecutive year that complaints have dropped.
But ombudsman spokesman Christian Guex told swissinfo that the "get rich quick" mentality of some investors could come back to haunt them.
Guex feels a future drop in share prices is inevitable, and while there is some evidence of bad advice being given, most complainants will only have themselves to blame.
"Some products are very complicated and if there is a downturn of 15 or 20 per cent some people could find out that there are products in their portfolio that they did not understand," he said at the conference.
"When things go well people get careless and start investing for the wrong reasons. We want people to be aware that they should understand fully what they are buying or they could suffer."
Complaints about poor investment advice from banks accounted for 15 per cent of the total in 2006, but peaked at 35 per cent towards the end of the last stock market correction in 2003.
Card limit too high
The rise of online banking, which allows customers to buy shares over their computers without specialist advice, could be particularly problematic in future, Guex added.
Online trading platform Swissquote saw client numbers soar nearly a third last year, attracting SFr1 billion ($820 million) to the service.
"The first goal to reach is to have the customer fully understand the connection between potential gains and risks. Only an informed customer can come to the right investment decisions," ombudsman Hanspeter Häni told the conference.
The ombudsman's office also noted a three per cent rise in the number of complaints relating to bank cards in 2006 – an increasing area of friction between banks and customers.
Häni strongly advised both parties to set stricter limits than the typical daily withdrawal of SFr5,000 ($4,100) on cards.
"With a daily limit of SFr5,000 for purchases set by the bank, a thief can clear out a bank account in a short period of time, often taking tens of thousands of francs," Häni said.
"I cannot therefore understand why customers don't set a monthly limit on their cards or the banks don't advise them of the consequences of such a [daily] limit."
swissinfo, Matthew Allen in Zurich
Of the 1,467 complaints received by the ombudsman, 660 were followed up in writing. Of these 17% were found in favour of the customer and 19% in favour of the bank, while 6% are still outstanding.
The rest were either not in the ombudsman's area of competence or were not clear cut.
Nearly a third of complaints related to sums of between SFr1,000 to SFr10,000 and 7% involved sums of more than SFr1 million.
Nearly a half of complaints (49%) came from the German speaking part of Switzerland (47% in 2005), 35% from abroad (37%), 13% from the French speaking Switzerland (11%) and 3% from the Italian speaking part of the country (5%).
The post of Swiss banking ombudsman was created in 1993 and is sponsored by the Swiss Banking Ombudsman Foundation, established by the Swiss Bankers Association.
The office is independent and impartial and offers services free of charge. It deals with on average around 1,500 complaints a year.
Current ombudsman Hanspeter Häni took up post on September 1, 2005. He is supported by a team of lawyers, economists and bankers.
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