CAPE TOWN - AS BLACK-OWNED businesses continue their struggle to secure financial assistance from banks, while others endure the abrupt termination of their bank accounts without valid reasons, the banking ombudsman stressed that they are there as a last resort and as a form of recourse to investigate any possibility of unfair treatment.
The banking sector has since the start of the pandemic been accused of discrimination, seeing the collapse of several black businesses, but the Banking Ombudsman Services of SA (OBS SA) has argued that if banks are found guilty of any misconduct, including discrimination, then the “OBS has the power to put things right”.
OBS communications manager Kwanda Vabaza said that there are always possibilities for companies to seek recourse and that OBS has jurisdiction to handle complaints from small businesses, urging any person who believes that they have been unfairly treated to lodge a complaint with OBS for that complaint to be investigated.
“OBS will consider complaints against banks from a small business, which includes complaints from a sole proprietor or trader, a juristic person, partnership or trust, with a turnover of less than R10 million.
“Our role is to provide recourse to aggrieved customers of banks in respect of losses that they may have suffered, or could potentially suffer, owing to maladministration by banks.
“We as the OBS have the power to put things right and the appropriate recommendations to address the issue based on the facts of each matter before us.”
While Independent Media received cases of discrimination currently being investigated by OBS, Vabaza said the ombudsman kept records of all Covid-19 relief-related complaints that came into their offices, but their stats do not distinguish between black and white, individual or business.
“Notwithstanding this, we can share with you that Covid-19 related matters made up 3percent of all our complaints received in 2020, but our complaints sub-categories do not specify if the allegations were based on racism.”
He said the role of the OBS is to also establish whether the client's loan application was received and considered timeously by the bank and if the application was declined, to see if the reasons for the declining of the application were adequately communicated.
But: “Our office does not have the power/mandate to force banks to grant loan applications,” he said.
When asked if banks act unfairly in their services towards black-owned businesses, he said banks have never made an undertaking that mistakes in service delivery or the provision of products won't be made.
However, “our office, daily, investigates such complaints and in some of the complaints, it has been our finding that there was maladministration on the part of the bank and appropriate recommendations were made to address the issues raised.
“Therefore, any person who believes that they have been unfairly treated by their bank may lodge a complaint with the OBS for that complaint to be investigated.”
Entrepreneurs questioned the process and justification of banks who deny financial assistance, even though they qualify, and who abruptly close bank accounts, yet the Financial Sector Regulations Act of 2017 about banks, states clearly the principles and procedures that need to be in place at a time of refusal, withdrawal or closure of a financial product or a financial service.
A bank must be subject to applicable regulatory requirements, documents, adopt, and implement processes and procedures relating to the refusal to provide a financial product or render a financial service to customers.
This applies also to the withdrawal, termination, or closure of a financial product or withdrawal or termination of a financial service to customers.
However, those actions cannot take place unless the customer is given reasonable and prior notice of the withdrawal, closure, or termination, the act confirmed.
Meanwhile, as unhappy clients and unions last month took to the streets of Sandton to protest against racist banks, political parties are also calling on the banking ombudsman to apply stricter penalties on banks who are found guilty of any misconduct, specifically discrimination.
Member of Parliament and ANC chief whip of the Western Cape legislature Muhammed Khalid Sayed argued that the ombudsman handles such matters way too lightly and that they needed to implement stricter measures (penalties) towards banks.
While both Sayed and EFF spokesperson Vuyani Pambo argued over how schemes continue to be used to buffer the white economy, the Good Party's Brett Herron pointed out how access to finance was the greatest obstacle to entrepreneurship.
“An entrepreneur's biggest obstacle to putting an idea into action, and launching a business, is access to finance. Nothing else is as real an obstacle to getting a business off the ground, and sustainable, than finance.
“Our governments continue to focus on small business advice offices, red tape reduction, and ease of doing business indices. They're focusing on the wrong things,” he said.
Investigations Unit – [email protected]
BUSINESS REPORT