Cape Town - Parliament has said it wants an urgent meeting with the Banking Association of SA and the Banking Ombudsman to answer to complaints made about unfair discrimination and the irrational and arbitrary termination of bank accounts.
Speaking at the end of a session during which the standing committee on finance heard a complaint from Gardee Godrich Attorneys about the arbitrary closure of customer accounts, chairperson Mkhacani Maswanganyi said this was not the first time they had heard of such conduct in the banking sector.
“There is a precedent where this committee conducted an inquiry into the financial sector transformation based on complaints from members of the public during the fifth administration term of Parliament and a report was produced to that effect.”
Maswanganyi said that a section of the same legacy report made reference to the alleged conduct of banks closing customer accounts arbitrarily.
He said that the committee would find time in its third term programme to take this matter forward with the Ombudsman for Banking Services South Africa, the Banking Association of South Africa, National Treasury and the FSCA.
In April, Gardee Godrich Attorneys filed papers at the Western Cape Equality Court, representing complainants in a class action by the Sekunjalo Group of Companies, in their interdict against Nedbank.
The court ruled in favour of Sekunjalo, however, Nedbank is seeking to overturn the interim interdict.
This latest development comes as Standard Bank threatens to close the bank accounts of Independent Media – a subsidiary of the Sekunjalo Group – on 30 September, risking mass job losses and endangering press freedom.
Presenting the complaint to the standing committee on behalf of Gardee Godrich Attorneys, advocate Tiny Seboko said they wanted Parliament to look into the systematic racial profiling of the banking sector.
Seboko told the committee she would not go into the merits of the pending court case but said that they had gone to Parliament with their complaint because the National Assembly had an obligation to exercise its oversight function to ensure that banking institutions did not treat people unfairly.
She said the Zondo commission had suggested that the banking laws and the legislative framework needed to be amended to give bank clients an opportunity to make representations in circumstances where the bank was considering a closure of an account.
With regard to the presentations made by the National Treasury and the FSCA, Seboko said the common thread in their presentations was that the banking sector was not entitled to unilaterally and arbitrarily interrupt banking services.
Committee member Itiseng Morolong (ANC) said it was a matter of extreme urgency that the Bank Ombudsman address the committee to shed light on the issue to allow the committee to determine whether there was a particular racial or gender demographic being targeted by banks when closing accounts.
ANC MP Gijimani Skosana said the issues raised by Gardee Godrich Attorneys were worrying and the committee needed to dig deeper into them.
DA MP Dion George said although the banks often target the wrong people or low hanging fruit, he disagreed with suggestions that banks targeted people based on a demographic.
The committee also heard from the Treasury and the FSCA about the applicable regulatory frameworks which oblige banks to notify customers and provide them with the opportunity to make representations before terminating their accounts.
Treasury financial sector policy chief director Vukile Davidson gave the committee a brief history of banking operations in South Africa and how banks were regulated, while steering clear of the Equality Court matter.
EFF MPL Floyd Shivambu said that even though the issue was being litigated the committee needed to invite the banks to explain on what grounds they were closing bank accounts belonging to people or institutions that they might have political differences with.
Committee member Wouter Wessels (Freedom Front Plus) said the sub judice rule applied to the proceedings of the committee, but Parliament’s senior legal advisor, advocate Frank Jenkins, said there was fertile ground to look at the matter from a perspective of trying to ensure a more equal relationship between banks and clients.
Jenkins said that other jurisdictions had intervened in the matter.