SA’s leading banks — Standard Bank, FNB, Capitec, Absa, Nedbank and Investec — will take parliament into their confidence next month on their lending practices and how they contribute to transformation in the country.
Chair of the portfolio committee on trade, industry and competition, Mzwandile Masina, said one of the issues the lenders would have to address was allegations that it was easier in SA to secure credit for consumption purposes than for production, and that lending practices were disempowering to previously disadvantaged South Africans.
“The meeting would be a fact-finding mission informed by observations made by the two committees following their meeting with the National Credit Regulator, the Treasury and the Competition Commission late last year,” Masina said.
“As parliament, we have a constitutional duty to conduct oversight over the implementation of legislation in the interest of consumer protection and facilitating transformation. Banks, as regulated entities, should be open and fair about their lending practices, in particular, the calculation of interest, confidentiality clauses and the fine print on credit agreements,”
“The meeting is to ensure that the banking sector in SA is open, transparent and of service to poor people to facilitate inclusion in the productive sectors of the economy. We have a responsibility as MPs to oversee the sector to ensure inclusive economic growth and to protect vulnerable consumers.”
Last year, the department of human settlements put forward a proposal to change housing finance laws to compel financial institutions to disclose critical information about their lending practices.
The proposed amendments to the Home Loan and Mortgage Disclosure Act aims to lift the veil on lending practices by requiring banks and other lenders to reveal data on home loans granted and declined.
The additional information, which would be submitted to the office of disclosure, which is housed in the human settlements department, includes the number of home loans approved, as well as details on home loan applications that were denied, including the reasons for the rejections.
The country’s home loan market is said to be worth R1.3-trillion and is dominated by the traditional banks: Standard Bank, Absa, FNB and Nedbank.
As many as 40-million South Africans have a bank account, which allows them to actively participate in the economy.
SA banks hold in trust the salaries and savings of SA workers, professionals, large and small businesses and the public service. Because they hold more than R5.8-trillion in customers deposits, banks are strictly regulated by prudential regulation to ensure that they do not invest or lend these funds recklessly and are able to repay customer deposits on demand.
Parliament will also engage with the Financial Sector Conduct Authority to “discuss the state of banking in SA, the credit profile within the sector, ratios of consumption credit versus productive credit per bank, bank charges, state savings and the Protection of Personal Information Act as it relates to confidentiality of clients.”
With Thando Maeko
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