This is an unedited statement issued by the National Credit Regulator
In a further boost for consumer rights, the Supreme Court of Appeal (SCA) has ruled in favour of the National Credit Regulator (NCR) in its case against Standard Bank where Standard Bank was charging excessive administration fees on home loans that were granted under the Usury Act 73 of 1968, before the National Credit Act (NCA) came into operation.
This case was brought to the courts after the National Credit Regulator received several complaints against Standard Bank for charging home loan administration fees in excess of the maximum allowed by the Usury Act. The Usury Act stated that no money lender could, in connection with a money lending transaction charge a borrower an amount exceeding the sum of R5 (excluding VAT) for administration fees. “We started investigating Standard Bank after we received complaints from Standard Bank home loan clients about the excessively high administration fees that Standard Bank introduced to existing home loan agreements following the introduction of the NCA”, says Annemarie Friedman, Senior Legal Advisor at the NCR.
The Usury Act was repealed by the NCA. Despite the repeal of the Usury Act, the NCA included certain transitional provisions relating particularly to pre-existing agreements under the Usury Act. The NCA makes some of its provisions applicable to pre-existing credit agreements that would have been subject to the NCA had it been in effect when those agreements were concluded. These provisions do not expressly address home loan administration fees. Standard bank argued that these fees are therefore unregulated.
Friedman says the NCR argued that Standard Bank could not charge home loan administration fees in excess of the maximum amount of R5.00 as set out in the Usury Act. “The SCA favoured this argument and held that Standard Bank is not entitled to charge an administration fee on home loans that existed at the time the NCA came into operation in excess of the maximum fee in the Usury Act until that fee is amended under the powers conferred by section 105(1) of the NCA.” She further added that in terms of this section, the Minister of Trade and Industry may prescribe a method of calculating fees contemplated by the Act. “Since the NCA came into operation, the Minister has not increased the home loan administration fees and the maximum of R5.00 is therefore still applicable”.
“Consumers who entered into home loan agreements prior to 01 June 2007 where mortgage amounts were less than R500 000.00 should check their bank statements to establish whether they have been overcharged on their home loan administration fees and should approach the NCR or Standard bank”, advised Friedman.