FINANCIAL provider WesBank’s woes look set to be in the spotlight for longer than anticipated following allegations of discrimination against black clients.
This was after the Progressive Professionals Forum (PPF) and political parties ActionSA and the African Transformation Movement (ATM) said action should be taken against WesBank, while a disgruntled client is preparing to fight the bank at the Constitutional Court.
The PPF has called on the Competition Commission to investigate the matter thoroughly and enforce appropriate punitive measures against financial service providers engaging in such erratic practices.
ActionSA has lodged a formal complaint with the SA Human Rights Commission (SAHRC) to investigate the allegations.
The ATM said there was a need for comprehensive investigations into discriminatory practices within the financial sector.
Meanwhile, a client, Mzukisi Ndara, is taking the bank to the Constitutional Court for allegedly defrauding him.
The calls came after a former WesBank employee last week exposed how the bank had allegedly been robbing black clients.
This after the former employee told the Sunday Independent that WesBank used a specific system to overcharge black clients, claiming that this was done purposely to charge black clients more than white clients.
He said the bank used the acquisition system to determine the interest rates and this resulted a large number of black clients being charged up to 18%, while the more affluent clients were charged 10%.
The allegations were echoed by financial investigator Emerald van Zyl, who said black clients were charged up to 18%.
When reached, WesBank said it was aware of the discriminatory pricing allegations made in the recent media reports against the bank regarding the calculation of interest rates in vehicle finance applications.
The bank said it would co-operate with any investigation into the matter.
“WesBank does not discriminate against customers regardless of race, gender or age. All vehicle finance applications are assessed on affordability and the customer’s credit profile in accordance with the National Credit Act.
“Other factors include asset risk and type, deal term and structure. Demographics such as race and gender are collected for regulatory statistical reporting only and have no bearing on approval or interest rate calculations,” the bank said.
The bank further said that Ndara had every right to pursue the legal options available to him.
PPF president Kashif Wicomb said: “The PPF urgently calls upon the Competition Commission to thoroughly investigate this matter and enforce appropriate punitive measures against all financial service providers engaging in such erratic practices. Unfortunately, these allegations are not unheard of, and it is disheartening that concrete actions have not been taken in the past to rectify such issues.”
Wicomb further said that the PPF condemned this erratic behaviour in the strongest terms as it not only compromised the principles of fairness and equality but also eroded public trust in financial institutions.
He said discrimination had no place in “our society” and his organisation stood firm as a watchdog against any attempts to undermine democracy and equality.
ActionSA spokesperson Lerato Ngobeni said: The main objective for submitting the complaint is to ensure that, should WesBank found guilty of the allegations that have been brought forward, the entire banking industry is held accountable and that no one may be discriminated against based on their race.
Unethical behaviour cannot be tolerated, and as ActionSA, we firmly believe in and fight for ethical behaviour,’’ she said.
Ngobeni was joined by the party’s Gauteng Youth Forum Chairperson Advice Chuma, Johannesburg Youth Forum Chairperson Jabu Mabunda and ActionSA activists who marched to the SAHRC offices to hand over the formal complaint on Thursday.
In a statement that was released earlier this week, Ngobeni said during the party’s inaugural policy conference last year, members approved policies that focused on restoring economic justice in the country.
She said ActionSA firmly believed that economic justice was the key to achieving social justice and non-racialism and building an inclusive society.
“WesBank’s actions, if proven to be accurate, run contrary to this belief and the covert racism it represents cannot be tolerated in a country with a problematic history like our own.
“Non-racialism is a pillar of our Constitution that is constantly under threat as social cohesion breaks down in South Africa, and it is the responsibility of every business in South Africa to act morally and treat every citizen the same in the workplace,” Ngobeni said.
ATM president Vuyo Zungula said it was bad that Van Zyl, who had looked into the matter, had received multiple complaints and found evidence supporting the claims that black clients were charged significantly higher interest rates.
Zungula also called on regulatory bodies and relevant authorities to conduct a thorough investigation into the allegations against WesBank.
He said the party emphasised the importance of upholding fair and just practices within the financial sector, with the ultimate goal of protecting the economic interests and rights of all South Africans.
“The ATM demands transparency not only from WesBank but also from the government in addressing these serious concerns.
“Racial discrimination within financial institutions contributes to economic disparities and undermines the principles of justice and fairness. The ATM remains committed to championing the rights of all citizens and holding institutions accountable for any wrongdoing,” Zungula said.
In his affidavit, Ndara, a former senior manager at the Eastern Cape Department of Health, said it all started when he entered into an instalment sale agreement to purchase a used 2004 Nissan X-Trail 2.2D SE, which was a manual and diesel model with 6 470 kilometres on the clock. He said the vehicle was valued at R270 000 but he purchased it for R297 990.
According to Ndara, the material terms of the sale agreement were the following:
- The purchase price was R297 999.
- Total expenses amounted to R35 340.
- Finance charges were in the sum of R143 083.
- Processing fees amounted to R3 500.
- VAT was a sum of R37 294.
- Additions (revenue stamps) were R100.
- The contract interest was 15.25% and the prime rate at the commencement of the contract was 11%.
Ndara said his monthly instalment amounted to R8 000.22, excluding insurance cover, and he was expected to be the owner of the vehicle once he had paid all the amounts owed to WesBank.
Ndara said the vehicle was presented as a new Nissan X-Trail and a superior model and he was forced to purchase it for R297 990 instead of R270 000.00.
He said WesBank and the car dealer carefully and fraudulently sought to hide the information that the vehicle was a used motor vehicle in the paper trail that was furnished at the bank.
“In addition to the fact that the respondents fraudulently misrepresented the true facts, they sold the aforementioned motor vehicle at an inflated price of R297 990, with an interest rate of prime plus 4.5% as opposed to prime less 2% to which I was entitled as a senior manager or director of a government department under the WesBank Government Scheme agreement,” he said.
Many clients also came forward following the Sunday Independent report last week.
A client, Thandiwe Zungu, said the bank charged her more than what she was supposed to pay for her Toyota Corolla. She said the bank ignored her when she launched a complaint.
“I don't have a log book of the car and they refused to remove it from my name. I thought maybe it was myself who did not know the way I was supposed to be debited. The bank cancelled the insurance on the car, but did not lower the payment method.
“I discovered very late these payment methods. When I took them up on the issue they just ignored me. They did not debit me and did not send me the logbook,” she said.
A former employee, who worked for WesBank between 1992 and 1999, said last week’s report was the absolute truth.
“The system was ruled by one field only when capturing. The moment you insert B, W, I and C it will use this to profile the applicant and change the score, meaning (i) the interest rate, (ii) the deposit required, and (iii) don’t forget the requisite insurance premium and the value-added products (Group Life and Cover Plus) that had to be added,” said the former employee.