The Consumer Credit Protection Act (“the CPA”) and the National Credit Act (“the NCA”) provide for the crystallization of essentially various constitutional rights which you enjoy and have levelled the playing field between you and a Credit Provider, such as your Bank.
No longer do Banks have the option to dominate and dictate to their customers and to deal with them from a position or perspective of selfish interests aimed solely at procuring maximum profit for themselves, often in ignorance of your interests, at their will, often despite contrary marketing strategies.
Knowledge of and if necessary exercising your rights is essential in order to ensure that you are not trampled upon in this day and age of a harsh economic climate which may be overwhelming and causes financial strain and consequently depression, anxiety, distress and marital disputes and effects your general sense of wellbeing.
It is important to know your rights as without knowledge of these rights and enforcement thereof when needed, these are meaningless.
To give you an insight, note the following with regard to the granting of credit, your qualification therefore, or the termination or reduction of your credit facility.
When a credit facility is provided to you by your Bank, it is intended to be used to fund your financial requirements on an ongoing basis and it was so understood by both you and your Bank. Hence it is a tacit term of the applicable agreement that the credit facility shall not be repayable or reduced on demand, unless your Bank’s risk would be materially affected by changed circumstances, which they must prove.
You must first of all determine that the jurisdictional requirements of The Code of Banking Practice (“the Code”) to which your Bank has ascribed to and is a member of and is accordingly obliged to abide to are met, to grant you relief in terms of the Code. We are able to advise you on this aspect – phone Paul at our Johannesburg branch – tel. no. (011) 326-3248. The Code sets out the minimum standards for service and conduct that you should expect from your Bank with regard to a credit facility and regulates how your Bank must relate with you.
In dealing with the applicable credit facility your Bank, with regard to the provisions of the Code, must:-
1. be guided by four key principles namely fairness, transparency, accountability and reliability;
2. adopt good banking practice and fairness in all the circumstances in dealing with the credit facility;
3. promote good banking practices by setting minimum standards for your Bank in dealing with yourself;
4. increase transparency, so that you may have a better understanding of what you could reasonably expect of its products and services;
5. promote a fair and open relationship between it and yourself;
6. foster your confidence in the banking system;
7. act fairly, reasonably and ethically towards yourself;
8. provide yourself with effective and adequate disclosure of information;
9. provide an accessible basic banking services to yourself;
10. not be motivated, in assessing your application for or terminating or reducing
a credit facility by discrimination on the grounds of gender, age or race;
11. if they wish to close your account, give you reasonable prior notice;
12. make a full and detailed disclosure to yourself about its declining or terminating your application;
13. extend credit to you in a manner that is responsible and that matches your borrowing requirements and financial capability;
14. respond to your request for reason/s for declining or terminating or reducing your credit facility, based on:-
14.1 the overall credit score;
14.2 information obtained from credit risk management services;
14.3 the outcome of the credit assessment;
14.4 your over-indebtedness; or
14.5 a specific policy of the Bank, that this policy is fair to you and on what basis, in terms of such policy, you have disqualified.
15. jointly with yourself, review your situation and develop a plan to address your financial difficulties;
16. advise you in writing of the process and the additional costs implications, prior to referring your account for legal action;
17. take reasonable steps to ensure that their legal representative/s perform his / her / their duties ethically and responsibly;
18. before taking any legal action, send to you a written notice, drawing the alleged default to your attention and making yourself aware of your options to resolve the alleged default.
If your Bank fails to abide to the said rules of the Code, you are entitled to refer their contravention to the Ombudsman for Banking Services Scheme (“the OBS”), to:-
1. consider the dispute, if it falls within its Terms of Reference (we are able to advise you in this regard – phone Paul at our Johannesburg branch – tel. no. (011) 326-3248) and to facilitate the satisfaction, settlement or resolution of the dispute, whether by agreement, by making recommendations by making a suggestion or recommendation to your Bank and yourself regarding how the matter should be settled, in order to resolve the complaint speedily by conciliation, a determination/s or by such other means as seem expedient;
2. make a recommendation or determination, which may include amounts awarded to you for damages and interest or amounts for distress and inconvenience, which you may effectively set off against your liability to your Bank in respect of the credit facility;
3. follow and implement any procedure (including mediation) which the OBS deems appropriate;
4. require your Bank to provide such information which, in the view of the OBS, relates to the complaint and is necessary for its resolution;
5. make a written recommendation setting out how the matter should be resolved, if the complaint has not been settled, stating the reasons for the recommendation;
6. proceed to issue a determination should your Bank not accept a recommendation that has been accepted by yourself and that satisfies the applicable requirements;
7. make a binding written determination based on the law or the Code, in case
that a recommendation has not been accepted by all parties concerned.
The determination may be taken on review, within a prescribed time limit, in which event, if the review fails, the said determination may be made an Order of Court by the party in whose favour the dispute was determined. If a review is not sought within the said prescribed limit, then the determination may similarly made an Order of Court.
Your Bank is not entitled to resort to litigation while a complaint is being dealt with by the OBS and in respect of matters not falling within the NCA, unless the OBS gives his or her written approval on the application of your Bank. Further and / or alternatively, provided that certain jurisdictional requirements are met in respect of which we are able to advise you – phone Paul at our Johannesburg branch – tel. no. (011) 326-3248, you may exercise your rights in terms of the NCA which provides that a credit provider (your Bank) must not unfairly discriminate, directly or indirectly, against you on certain grounds set out in the Constitution or the Promotion of Equality and Prevention of Unfair Discrimination, Act (“PEPUD”) when—
1. assessing or requiring compliance by you with the terms of a credit agreement;
2. exercising any of its rights under a credit agreement;
3. determining whether to continue, enforce, seek judgment in respect of, or
terminate your credit agreement with them.
A credit provider (your Bank) must, on request from you, advise you in writing of the dominant reason for offering you a lower credit limit under a credit facility than applied for by you, reducing the credit limit under an existing credit facility or refusing to renew a credit facility with you.
The reference to “reasons” is to “reasons” that are justifiable.
In terms of the NCA the Court may draw an inference that a credit provider (your Bank) has discriminated unfairly against you on the basis that it has refused, or failed without reasonable cause, to respond to a request made by you for such reasons.
Further and / or alternatively to your rights in terms of the Code you are entitled to:-
1. bring a complaint in terms of Section 136 of the NCA and Section 4(c), (d) and (e) of the CPA and / or;
2. institute proceedings before an equality Court in terms of the PEPUD for a declaration that the Court draws an inference that your Bank has discriminated unfairly against you on the basis that your Bank has refused, or failed without reasonable cause, to respond to a request made by you for reasons or has furnished reasons which are unjust.
In terms of the NCA you are entitled to inspect the original credit facility agreement and obtain a copy of the statement of account, from its inception. You would require these documents, inter alia, to determine whether your bank must reduce the amount allegedly owed in terms of the credit facility, having regard to the in duplum rule (essentially that the amount of interest does not exceed the capital of the credit facility) and whether interest had been credited ahead of the capital.
Disclaimer: This article is for information purpose only and does not constitute legal advice. Call on our attorneys for legal advice, rather than relying on the information herein to make any decisions. The information is relevant to the date of publishing.