Pressure to change the Usury Act is growing now that the government has called on the public to suggest improvements to the law, writes Tebello Radebe
THE “David and Goliath” battle concerning overcharging by the banks, spearheaded by the Financial Research Foundation (FRF), rages on even though the principals do not seem to differ on whether people are in fact paying over the odds. This week the government entered the fray by calling on the public to suggest changes in the law at the centre of the storm.
FRF’s Dave Thomas is adamant the banks are guilty of “overcharging” thousands of people with instalment credit deals ranging from bonds to cars and thereby breaking the Usury Act and other credit laws daily.
He estimates that in the minibus taxi industry alone an average of R20 000 per transaction is overcharged “and the figures owed to taxi owners run into billions”.
However Nico van Loggenberg, general manager of the Council of South African Association of Bankers (Cosab), was quick to repudiate the FRF’s claims.
Cosab has found evidence of a few isolated cases where people were overcharged. “These instances have and are being corrected as they are being discovered and they are nothing more than largely the result of genuine human error,” Van Loggenberg said.
“We have done our own investigations. We admit that mistakes do occur.” He added that these mistakes are not as many as the FRF made them out to be.
A highly placed government source told the Mail & Guardian that while key decision-makers in the government were sympathetic to the views raised by the FRF and agreed that a solution should be found, there was concern about the methods the FRF uses as well as the implications for the government if it were seen to be taking the FRF’s side.
In response to the government’s move to seek changes to the Usury Act, Van Loggenberg said he welcomed both the need to consolidate the different laws that arose from the homelands legacy, as well as the need to make the law more “understandable, user-friendly and to enable it provide more protection to the consumer”. Asked why the Department of Trade and Industry (DTI) has decided to run adverts – calling on the public to submit ideas to change the Usury Act, DTI official Lizell Schultz said the department felt the law needed to be reviewed because “to our – knowledge there has been no prosecution under this law since 1968 probably because it allows for wide interpretations”. – She said the DTI was aware of the claims made, but declined to comment on them. The FRF has taken these cases to the – ministries of Finance, Justice, Transport and the DTI, but has received scant response to date.
FRF legal adviser Doug de Lange says the key aspect of the law which the banks break with impunity is their refusal to disclose details of the deals in dispute. This, he said, is compounded by the judicial system, which refuses to look at the Usury Act provision.
De Lange said he did not see any reason why the laws should be changed, as in his view the Usury Act is simple and clear enough to give adequate protection to all. What really irks him is that the law is not applied at all.
“The attorneys general are not prepared to prosecute since it is generally accepted that the banks do not have the intent to commit a crime,” said De Lange.
In keeping with what appears to be the operational style of the FRF, the M&G was supplied with press cuttings and references to undetailed cases, such as one in June involving criminal charges laid against Wesbank.
Advocate Billy Downer of the Western Cape attorney general’s office said the case docket had just arrived at his desk “two days ago”. A decision to prosecute or not still had to be taken and this may be in another “two weeks or so or even up to two months”.
So while the FRF will pull out one or a handful of cases to support its claims, the authorities seem to be taking all the time in the world to address the issue. Meanwhile, discontent is believed to be brewing, at least among sections of the taxi industry in the Cape who are reported to be planning disruptive protest actions.
Says Thomas: “The banks are hoping the problem will go away if they keep their heads in the sand. They are aware of the heavy workload on the courts which make them unable to cope … The banks need to be forced to admit preferably in court that they have overcharged. They also need to commit to pay back every cent that they have overcharged.” And so the saga continues.