Cold Comfort: Carol Mills with her Satinsky car. Since the collapse of the 699 scheme last month, she is among thousands who have pulled the advertising stickers off the car, but she is battling to pay the full instalment.

Port Elizabeth - The 699-ers will have to wait for an undisclosed period of time to find out if the high court in Port Elizabeth will certify a class action against the banks that financed the ill-fated Satinsky car deals.

Judgment was reserved on Thursday after advocates representing the three banks – Nedbank’s MFC, Absa and Standard – argued, among other things, that a lack of commonality between the thousands of cases meant the legal requirements for a class action were not met.

It is believed that some 29 000 people bought cars from Satinsky in the past six years, making this South Africa’s biggest car industry scandal.

Most earn between R6000 and R12 000 a month, and could only afford the finance instalment when paid an advertising fee in return for having their new cars plastered with “new car from R699pm” stickers.

With Satinsky having pulled the plug on that deal, and the fees having stopped, tens of thousands have been plunged into financial crisis.

The ultimate aim of the court action, brought by Port Elizabeth law firm Pieterse, Cary, Finlaison, is to have the bank contracts declared null and void on the basis of reckless lending, a provision of the National Credit Act.


So far the banks have vigorously denied allegations of reckless lending, claiming they assessed the applicants’ affordability in the normal ways, based on the information they were supplied by Satinsky, and they had no reason to believe any of it was false.

There are literally billions at stake.

In MFC’s case alone, the bank granted 14 000 Satinsky loans from 2007 to July 7 this year, with a collective outstanding exposure of R1.6 billion.

MFC is at pains to point that it cannot define how many were 699-ers, as Satinsky chief executive Albert Venter did regular car sales as well, but it’s fair to say the bulk would be the cars-with-stickers lot.

Absa has revealed that it has financed 6511 Satinsky deals since 2008 and Standard Bank has yet to announce what its 699 exposure is.

The problem with Pieterse, Cary, Finlaison choosing Johannes Bartosch of Port Elizabeth as the 699-er applicant to represent all the other thousands, is that he, like so many others, cannot prove that Satinsky fraudulently reduced his living expenses amount when submitting his credit application information to Absa last November.

That’s because he supplied that information to Satinsky by phone. Because of that, the banks have argued in court papers that the claims of expenses having been manipulated to influence credit scoring were completely reliant on hearsay and speculation.

Well, some can prove it, because they submitted their income and expenses details to Satinsky in writing – on a Satinsky form.

Consumer Watch has featured two of them on this page in recent weeks: “Dominique” and pastor “JB”. The case of Carol Mills, the third 699-er who has approached Consumer Watch with proof that Satinsky reduced her declared monthly expenses, provides some insight into how the banks will defend reckless lending claims.

It is argued that while they did not do the numbers fiddling, they did not do enough to check and interrogate what were in many cases implausibly little living expenses.

One application, for example, put an applicant’s total monthly living expenses at just R300.


Carol Mills of Discovery, Gauteng, also submitted her income and expenses information to Satinsky via e-mail, rather than phone, in September 2012. So she has proof that her stated expenses total R10 700 – was reduced on her MFC credit application to just R6400.

Mills says because she has a cheque account with Nedbank, a simple cross reference by MFC would have established that the expenses figure of R6400 was inaccurate, and on that basis, the bank should not have granted her the loan, making it a case of reckless lending.

Naturally, MFC disagrees.

Managing executive Trevor Browse said: “When we do look at current account transactions, we can’t tell what is groceries, card payment, ATM withdrawal to pay fuel, cash to pay gardener, pool chlorine, dog food etc.

“We have to compare the client’s signed and declared expenses versus their contractual bureau recorded expenses and make a reasonableness assessment of the difference.

“We then add a net cash flow cost-of-living buffer to make sure we err on the conservative side.”

In Mills’s case, he said, based on the information provided, she had a monthly surplus of R8309, so “there was plenty of room for affordability to service the new, full car instalment. There was no reason for us to doubt the figures that Ms Mills signed”, he said.

The problem is that, in reality, that’s simply not the case, Mills says.

“I am struggling to afford this car. I am paying R2900 a month, plus insurance.”

She said MFC had offered to extend her payment period from 72 months to 84 months.

“But this would mean I’d be paying additional interest, so the car would cost me a lot more in the long run.

“The bank says it’s ‘committed to helping clients’.

“In my view this is not helping,” she said.

Other banks have also offered to finance terms to restructure the loans to create a balloon payment, in order to reduce the monthly repayments, but so far, none appear to be budging when it comes to lowering the interest rates.

“These loans were priced at normal, competitive market rates, to make sure they cover the bank’s expected loss ratio,” Browse said.

“Any price concessions or reductions will cause this sub-portfolio to run at a loss, and we can’t afford to make losses, as seen in recent banking news (A reference to African Bank’s financial woes).”

Browse repeatedly pointed out that while Satinsky appeared to have fraudulently reduced what 699-ers declared as their living expenses, all the applicants signed the bank credit application forms.

Sadly, it is true that many 699-ers signed the bank forms without checking all the numbers, trusting that they were correct – and the Satinsky reps who delivered their cars, and their paperwork, left them without copies of those signed documents.

Consumer Watch asked Browse whether the bank intended to take legal action against Satinsky.

“Yes, on both Ms Mills’s loan and that of pastor ‘JB’, we have sent legal letters to Satinsky asking why their staff recorded expenses different to what the clients disclosed.

“(Satinsky chief executive) Albert Venter has refused to answer this question.

“We are holding off with civil litigation as we have found only the two deals Consumer Watch has shared with us –out of 14 000 – have potential expense manipulation.

“On both of these, JB and Ms Mills signed the incorrect expenses, so they share part blame. We will be sharing these examples with the national credit regulator to assist their investigation currently under way. If we find more deals –and we encourage the public to come forward, please where Satinsky misrepresented car buyers’ expenses, it would assist us to build a case.”

Browse said the bank hoped that “governmental agencies” were investigating the case “as a larger scale criminal fraud” or at least investigating “the legality of cash flows to Hong Kong entities (Blue Lakes)”.

Cape Times