Debtfree DIGI Jan 2016

NEWS CONTINUED
say they were just called and told to go sign
papers after the bank had dealings with their
daughter (a business lady whose business was
barely ticking over herself). This was for R500
000. Various loans and payments show the
farm was in unsuccessful. The judge described
it as a bottomless pit into which money was
being poured and said no one could think
this was a successful business and good
investment, including the bank. Four large
loans were taken to try keep the farm afloat. In
2003 – R100 000; in 2005 – R200 000; in 2006
– R651 000 in 2008 – R500 000.
The bank made the couple’s daughter sign
surety for the loan. In their calculations (on the
computer) the bank used the income of the
couple (R600+ each month)PLUS that of the
daughter. This is a problem since a surety is only
relevant when the main parties to a loan fail to
make payment and not during the evaluation
of ability to pay. Even so, the daughter would
not have been able to pay the amount each
month anyway.
During the case expert witnesses for both sides
were called and the Judge found that the bank
had failed in it’s obligations (both financial and
moral). The lack of original paperwork harmed
the bank’s case greatly. though as usual they
pointed to other typical documents that might
have been in use at the time. The fact that the
bank took the daughter’s income and lumped
it together with the parents when working out
their ability to repay the loan was also a big
mistake by the bank.
Due to the bank failing to make sure the
consumers could actually pay back the
amount required every month the judge
declared to loan ‘reckless’ and has told the
bank they cannot have the property or the
money back. It was also highlighted that to
avoid credit being reckless a creditor not only
has to do an assessment but also the result of
the assessment (if it shows the consumer cant
realistically pay) needs to be used. You can’t
do an evaluation and realistically see that a
consumer will not be able to pay and then still
lend them the money anyway.
The case sets a number of important presidents
and also serves to encourage those who in the
past have been victims of reckless lending.
These things take time and effort but it is
often worth it to fight against legal action by
a bank who is actually dealing with the result
of it’s own employees past mistakes. The bank
have made it clear that they have learnt from
past issues, like this, and have changed their
internal policies (a few years back now) so that
the income of the surety is no longer taken
into consideration when doing affordability
assessments. It is encouraging to see that this
policy has already wisely been changed - this
case was from quite a while back. No doubt this
was a strong R1.7 million reminder of exactly
why the policy was changed in the first place.
Download: ABSA v De Beer & other Case
no.26749 2001
African Bank
Find New Insurers
African Bank (which is now under curatorship),
has announced that they have secured a new
insurance arm for their banking and credit
granting operations. This follows after a lot
of fun and games involving members of their
old home grown insurance (Standard General