Home Opinion and Features What you should know about your consumer rights in the banking sector

What you should know about your consumer rights in the banking sector

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South African consumers are offered a wide range of protection with legislated rights, but over the past few years, major corporates and scam artists are willing to take advantage of the public more boldy, says the Ombudsman for Banking Services (Obs), Reana Steyn.

Consumers are offered a wide range of protection in the form of legislated consumer rights. These rights have been developed and applied over the years into the framework that we know today. Picture: Karen Sandison/ANA

SOUTH African consumers are offered a wide range of protection with legislated rights, but over the past few years, major corporates and scam artists are willing to take advantage of the public more boldly, says the Ombudsman for Banking Services (Obs), Reana Steyn.

What rights do consumers have?

According to Steyn, all bank customers have the right to be treated fairly, reasonably and ethically by their bank.

This right is reinforced by the banks in making sure that no customer is discriminated against on the grounds of marital status, gender, age or race in the provision, and quality of banking services.

“However, it is important to note that not all discrimination is unfair. Banks have special products or service offerings that are specifically designed for members of a target market group, such as student loans,” said Steyn.

Consumers’ right to apply for credit

In terms of the National Credit Act (NCA), all adult natural persons and every juristic person or association of persons have the right to apply for credit.

The Act also recognises the banks’ right to refuse to enter into an agreement with a consumer, provided that the reasons for the refusal are reasonable and consistent with the law and the banks’ risk appetite.

Right to negotiate for a more favourable interest rate.

The Ombudsman said it had received complaints from consumers who dispute the interest rate charged on their loan accounts and feel that it is too high.

“Unfortunately, unless the interest rate applied by the bank is not in line with the prescribed rate per the NCA, the consumer will be bound by the agreement,” said Steyn.

Steyn said consumers do have a right to negotiate with credit providers and preferably shop around, especially if the interest rate that is being offered is not in line with what the consumer deems fair.

Consumer Rights regarding “set off” as per s124 of the National Credit Act

Previously, it was acceptable for banks, without prior notice, to transfer money out of the customer’s account that was in credit and pay the funds into an account that was in default.

This was called the set-off. However, Section 124 of the National Credit Act now regulates this in respect of credit agreements regulated by the NCA.

Right to receive notice prior to the bank closing an account

According to the organisation, the current legal position is that banks are allowed to terminate their relationship with consumers.

The only requirements are that the bank must provide the consumer with a reasonable notice of the termination (around 30 days) as well as the reasons for the termination.

Steyn said consumers have the right to lodge a complaint against a bank as it is one of their fundamental consumer rights.

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