Usury expert Emerald van Zyl is waging a campaign for repayment of this overcharge.
Emerald van Zyl, the usury expert who is bringing a case of discrimination against FNB in the Cape Equality Court, has now trained his sights on Standard Bank.
He claims Standard has over-stated its financial statements by as much as R2 billion since 2009 through a R50 a month admin charge that was declared illegal by the Supreme Court in 2013.
The amount of money is small, you could easily miss it when checking your monthly statement. Who would quibble over a R50 admin charge?
Van Zyl says it actually started out as a R5 a month admin charge, which was introduced in 1990 under the Usury Act as a compromise to stop banks discriminating against the low-cost, predominantly black housing customers. Rather than charge low-cost (black) customers higher interest rates, banks were allowed to levy this R5 a month charge to compensate them for any financial harm they might suffer by treating customers equitably.
When the National Credit Act (NCA) came into effect in 2007, the banks were allowed to bump this R5 admin fee to a maximum R50 a month, which would henceforth be called a “service fee”, provided a new written agreement was entered into with the customer. Van Zyl says even though Standard Bank lacked written agreements, it went ahead and charged the R50 a month fee – in violation of the law.
In 2012 the National Credit Regulator took Standard Bank to court over this, and eventually won the case in the Supreme Court of Appeal. The court found that Standard Bank was violating the NCA and demanded customers be refunded by January 2013.
In a press release issued in January 2013, Standard Bank announced that all prejudiced clients had been refunded. In many cases, this monthly over-charge amounted to more than R10 000. Multiply that by several hundreds thousand mortgage clients, and the amounts involved potentially run into billions of rands.
But when Emerald van Zyl started taking a closer look, he concluded the bank was stretching the truth in claiming it had refunded clients. Based on a sample of 120 customers, he found only 50% had been refunded. And that the refunded amount was just 45% of what was due.
He says he wrote to the bank’s then CEO but did not get a reply. He then took up the case of a client, Ms G.N. Mathekga, whose mortgage statements reflected a “service fee” of R50 plus VAT before and after 2007, amounting to an over-charge of about R9 000.
When Van Zyl asked the bank to refund this money to the client, the bank replied that the term of her loan agreement had been extended as she was unable to meet her monthly repayments. As such, this amounted to a material change to the original agreement, and in terms of the NCA the higher fees were allowable.
Van Zyl points out that the only way the bank could continue to charge a R50 a month service fee was if a new written agreement was concluded with the client, as demanded by the NCA.
“This is in total contradiction of the Appeal Court judgment, and the directives op the Usury Act that determine that any administration fee must be agreed upon in writing in the instrument of debt,” wrote Van Zyl to the bank.
Based on an extrapolation of the R50 monthly over-charge spread across all the bank’s mortgage customers, Van Zyl estimates the bank may have over-stated its financials by about R2 billion since 2009. When he raised this with the bank’s auditor, KPMG, he was told the matter was being addressed by the bank.
In reply to Van Zyl’s claims of continuing over-charging, Standard Bank spokesperson Ross Lindstrom says the bank took the decision to credit the home loan accounts of a large number of customers six years ago in light of the Supreme Court decision.
“Standard Bank has had extensive engagements with Mr Van Zyl, in his capacity as a financial consultant, acting on behalf of some of our clients. On average, emails from Mr Van Zyl are acknowledged within 48 hours and a substantive response follows soon thereafter (if the information is easily located), or he is informed that Standard Bank South Africa is still collating the relevant information,” says Lindstrom.
“The amount of R2 billion suggested by Mr Van Zyl is without any factual foundation and is disputed by Standard Bank.”
Lindstrom argues that Van Zyl continues to make unfounded allegations against the bank and is trying to benefit financially by pursuing his claims of over-charging.
Says Van Zyl: “Despite what Standard Bank is saying, it is not correct to say that all affected clients have been refunded. I have presented them with numerous instances where clients have not been refunded. Why does it take someone like me to bring this to the bank’s attention? It shouldn’t be up to me to correct every unlawful charge levied by the bank, and the regulators certainly aren’t doing their job.”
Lindstrom says customers who feel they have been wronged can approach independent bodies like the NCR or the Ombudsman for Banking Services, which will cost the customer nothing.
“Despite this, Standard Bank will continue to engage with Mr van Zyl where our clients have mandated him to represent them. However, in line with various banking statutes and The Code of Banking Practice, Standard Bank cannot engage in a public debate about individual clients’ accounts or with third parties who are not mandated to represent our clients,” says Lindstrom.
“Standard Bank is happy to investigate any of our clients concerns with regard to the fees being charged on their home loan agreements at no cost to the client.”
Queries with regard to the fees being charged on home loans can be sent directly to Standard Bank at: firstname.lastname@example.org or clients can call us on 0860 101 101.