ANGELIQUE ARDÉ: Much-vaunted credit act not so useful in Satinsky scam
When mention is made of the 2008 global financial crisis, we are often told South Africa was "insulated" by the National Credit Act, a piece of legislation that is apparently lauded worldwide. Yet in the wake of our own much smaller crises, the act apparently has had little efficacy.
The "Drive a New Car from R699" scam is a good case in point. When it imploded in July 2014, about 28000 consumers caught up in the scheme were still indebted to their banks, many of them overindebted.
A great many have either had their cars repossessed by their banks or have surrendered them because they could not afford the full instalments when they stopped getting rebates for advertising the scheme.
The banks that financed these deals - all of them did bar WesBank, which gave the scheme a wide berth - have denied that they included the advertising rebate in the consumer's income when assessing whether a consumer could afford the credit.
WesBank reportedly decided against doing business with the Satinsky Group, the motor dealership at the heart of the scheme, because of concerns it had about a business model that appeared to be unsustainable and displayed the traits of a Ponzi scheme.
When the scheme imploded, WesBank CEO Chris de Kock lambasted his competitors - which had collectively lent R2.8-billion to Satinsky Group buyers - for failing to conduct proper due diligence on the scheme and the dealers, which acted as agents of the banks.
The banks had done their customers a "huge injustice" for lending credibility to the scheme, De Kock said in an interview with Business Times.
Since then, consumers have complained in droves to the media and the National Credit Regulator about the many serious misdeeds of Satinsky and the banks involved, including the banks' refusal to give clients copies of their applications for credit so that these can be examined for evidence of reckless lending.
Most Satinsky consumers applied for credit by phone, but the recordings of those calls are allegedly not available.
Many of those who have seen their credit applications have found that information was falsified by Satinsky staff, so that the consumer could pass the affordability assessment. One of the more outrageous examples of this was of a policeman who earned R9000 a month and discovered on his credit application that only R300 had been allocated to his living expenses, which included rent, food and petrol. Some consumers with severely impaired credit reports were approved for vehicle finance.
So what has the regulator done? It has succeeded in bringing a case against Satinsky to the National Consumer Tribunal - for misleading advertising, which is prohibited conduct in terms of the National Credit Act.
Consequently, in December, the tribunal imposed an administrative fine of R150000 on Satinsky.
Commenting on the ruling this week, Simon Lapping, a former consumer activist and now ward councillor for the DA, said the regulator had pursued Satinsky on a minor transgression, in the context of the scam. "Misleading or deceptive advertising of credit is serious, but what of the charges against this 'credit provider' for not doing proper affordability assessments, for falsifying information on the consumers' applications for credit, for failure to issue pre-quotation agreements, and for the failure of its agents to abide by the NCA? And where are the recordings of the applications for credit? In my view, no recording means no agreement.
"Is there another case pending against Satinsky? If not, why not?"
According to Lapping, the fine is a little more than what Satinsky Group mastermind Albert Venter reportedly spent on flowers every month when he was living the high life.
Last year, the regulator brought a case against Absa for its lending practices relating to the Satinsky scheme. But before the matter was heard by the tribunal, it was settled between the parties on the basis that Absa would pay an administrative fine of R10-million. When, how and how many consumers will be remediated is confidential.
Why the lack of transparency?
It instils no confidence in the regulator and does not bode well for debtors of Nedbank's vehicle financing arm, Motor Finance Corporation, and Standard Bank, which are in the dark concerning these cases.
The regulator has a policy of not sharing its papers with the media despite these being public documents, and has been coy about commenting on anything relating to banks that lent to Satinsky customers.
Why? So that the errant banks can save face?
The regulator's case against Motor Finance Corporation was heard by the tribunal this week and a postponement order was issued in terms of which the matter will continue on March 19, according to the tribunal.
Neither the tribunal nor the regulator responded to questions about when the NCR's case against Standard Bank will be heard.