Independent Online

Friday, June 24, 2022

Like us on FacebookFollow us on TwitterView weather by locationView market indicators

Zondo says current banking laws in SA do not protect clients enough

Chief justice Raymond Zondo. PHOTO, Karen Sandison, African News Agency, ANA.

Chief justice Raymond Zondo. PHOTO, Karen Sandison, African News Agency, ANA.

Published Jun 23, 2022


Following the landmark ruling made by the Equality Court that granted Sekunjalo Group an urgent interdict, with costs, barring Nedbank from closing any of the companies’ accounts, protection to clients could soon be offered in the form of new laws.

This comes after a recommendation was made in the final part of the report of the Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector.

Story continues below Advertisement

The commission recommended that existing laws need to be amended, or new laws should be enforced, allowing clients an opportunity to defend themselves, before a bank in South Africa can shut down a person’s account.

Unfair that banks can simply close accounts

Chief Justice Raymond Zondo said that it was unfair that banks can simply give a client reasonable notice of termination before shutting down accounts.

The current law, coming after the Supreme Court of Appeal (SCA) ruled that banks were not obliged to hear the client's side, since the two shared a contractual relationship.

"In this day and age in South Africa, it is unacceptable that an institution as powerful as a bank should have no obligation to hear … what a client has to say before the bank may close that clients’ account on suspicion that the client may be involved in illegal or corrupt transactions," Zondo said.

"In our legal system, even those who are accused of rape and murder are not sent to jail without being given an opportunity to tell their side of the story. There is no reason why banks should not be required to observe this basic principle," Zondo further said in his state capture report.

Sekunjalo victory against Nedbank

The group had turned to the equality court for an interdict after Nedbank issued it with a notice to terminate its banking facilities, claiming it had suffered reputational damage in banking accounts associated with Sekunjalo Investment Holdings Chairman, Dr Iqbal Survé, and allied companies within the Group.

Story continues below Advertisement

The court found that Sekunjalo had been prejudiced by the decisions to unbank the group.

Judge Mokgoatji Dolamo found that Sekunjalo had a prima facie case of discrimination, and that Nedbank had treated it differently to the likes of the Steinhoff Group, Tongaat Hulett, EOH Limited etc.

He also found that Sekunjalo and its entities would suffer irreparable harm if their accounts were to be closed, something Nedbank sought to diminish in its technical representations to the court.

Story continues below Advertisement

The judge said that pending the final determination of Sekunjalo’s main Equality Court application, any of its accounts that had already been closed at the time of the hearing of the application should be reopened with immediate effect.

Reacting to the decision, Survé said: “This is a resounding victory for not only Sekunjalo and its Group of Companies, but for all South Africans who have faced any form of discrimination by the banking fraternity.I would like to thank my colleagues, and the teams who have worked tirelessly on preparing for this case and fighting the prejudices of the past that still make themselves felt in the present, for all their effort and their support. This is one step closer to realising an equal society for all in South Africa at last.”

[email protected]

Story continues below Advertisement