South Africa’s latest state capture report recommends the introduction of new banking laws, including regulations on when accounts can be closed.
The report’s author, Chief Justice Raymond Zondo, made the recommendations following the closure of four bank accounts linked to the controversial Gupta family.
First National Bank, Standard Bank, Absa and Nedbank all closed their accounts, citing legal obligations, after several suspicious transactions. The banks also cited possible reputational damage as a reason for closing the account.
Zondo raised specific concerns about the closure of bank accounts without consulting customers, which led the commission to make various findings regarding the “unfair” elements of unilateral bank terminations.
“In Bredenkamp and Others v Standard Bank of SA Ltd the Supreme Court of Appeal (SCA) ruled that a bank was not required to hear its customer’s side of the story before the bank could terminate the relationship,”
“It appears that SCA’s basis for this decision was that the relationship between a bank and a customer is contractual,” he said.
Contrary to the SCA ruling, Zondo said it is unacceptable that an institution as powerful as a bank has no obligation to hear what a customer has to say before the bank can close the account. client.
He added that this is not in line with South Africa’s constitutional values and that a decision to close a customer’s bank could have various far-reaching consequences.
Due to the enormous power of banks, no serious business could operate in the country if bank accounts could be terminated unilaterally, Zondo said. Depending on the size of a business, this could have dramatic effects on people who keep their jobs, he said.
He is just that banks should be required to offer their customers the opportunity to be heard or to make representations to show that there is no reason for the bank to be concerned if it is suspected of suspicious behavior, Zondo said.
Zondo recommended that new laws be enacted to introduce the requirement of “fairness” in bank-customer relationships, or that existing legislation be amended to reflect the requirement.
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