THE EQUALITY Court, last week Thursday, rejected the claims that First National Bank discriminated against Black low-cost housing clients by charging them a higher interest rate than their white counterparts.
It’s been a long road for Emerald van Zyl, the financial investigating consultant who, in 1998, discovered that Saambou was charging its clients interest in advance in contravention of the Usury Act. What this meant was that clients were charged interest on the entire bond before they even used it. Then further interest was calculated at the end of each month. The net effect was that clients who were scheduled to repay their bond in 20 years found it was extended by another 10 years.
First National Bank bought Saambou’s home loan book when the latter collapsed in 2002. Although FNB obtained the mortgage book of Saambou for R1 after the bank collapsed on 9 February 2002, it obtained the Low Cost Housing mortgage book by securitisation in 1998/1999. This was confirmed by the Curator of Saambou, Mr T.J. Louw, in his founding affidavit as follows: “On my date of appointment (9 Feb 2002) Saambou had directly or indirectly sold to other banks, mortgage loans to a value of approximately R 2.6 billion, all of which are now held by FirstRand Bank Limited”.
In 2005, FNB admitted to the dubious accounting practices of Saambou and moved to rectify the problem but a trio of forensic experts including Gregory Johnson, Dr David Klatzow and Van Zyl alleged that the amount FNB paid-out addressed only a fraction of the problem – just R154 million. Media reports at the time described van Zyl as a “long campaigner against the overcharges”. At the time, he was said to have stopped 164 sales in execution arising out of supposed arrears in the bond book FirstRand took over from Saambou. “Only two of the clients he has represented have been found to have been in arrears,” www.security.co.za. wrote.
In 2013, the claims were dismissed by the North Gauteng High Court and a subsequent appeal was also dismissed by the Supreme Court of Appeal with punitive costs in favour of FNB. Van Zyl has maintained that the judgement was flawed because he wasnt there with accusations of racism. He says he accused the bank of charging clients interest rates above the permissible amount in terms of the Usury Act. The judge found no racism and ruled the interest rates charged were reasonable.
The ruling will be a hard pill to swallow for the thousands of clients who have waited for years while the matter was postponed repeatedly in the courts. Van Zyl has suggested a possible constitutional court battle.