Consumer finance

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Category : Consumer finance

Date : 21 August, 2015

Status : In Process

Case 1

Complainant had acquired a loan under the Botswana Defence Force Scheme. Later during the contract period, he approached the bank to clear the balance in order to apply for a new loan of a higher amount. The balance furnished was much higher than what was expected by the customer. Took up this issue with his bankers, and for at least 2 years the matter still remained unresolved.

Complainant vehemently disputed the balance, because even taking into consideration interest rates fluctuations, still the loan balance did not add up. He even showed as evidence that at the time he acquired the loan a friend of his was also granted a loan on similar terms and conditions and prospects of default were non existent as the deduction were made at source.

Investigations revealed that the loan repayment amount was understated by P98.00, and therefore monthly payments for the period of the loan were underpaid by the same amount, and this amount attracted default interest.

Bank offered to refund the customer excess repayments, interest caused by underpayment, however, the customer had to pay the capital amount (without interest). The Banking Adjudicator further recommended an ex-gratia payment of P500.00 by the bank to the customer for having suffered distress and inconvenience within the two years as the matter could have been resolved within a shorter period.

Case 2

Complaint had a personal loan of P20,000.00 sanctioned and payable over a period of 36 months, unfortunately at an understated installment. The Customer realized that there was something amiss on her loan account, when the bank continued deducting repayments long after the expiry date as per the loan contract.

The bank realized that it had incorrectly calculated a low installment for the loan and therefore a portion of the capital amount remained unpaid with default interest charges.

The customer was advised that she will only be liable for the capital shortfall on the loan repayment, free of interest. The bank refunded the excess repayments and unduly charged interest. Customer was advised to accept the bank’s outcome as reasonable.

Case 3

The claimant is the mother to the deceased, who was an accountholder with one of the commercial banks. When she called on the bank enquiring of the status of her deceased son’s accounts, she was advised by the bank that her son had a loan balance which she was required to clear to avoid further interest charges, whilst awaiting a claim from the insurance on a credit life policy. She accordingly settled the loan as advised at P3522.40 plus accumulated interest to date.

After some months she approached the bank enquiring on the status of the claim, and was advised that the insurers did not pay and no reasons were advanced.

Investigations revealed that, no claim had ever been lodged with the insurance company and the time to lodge a claim was prescribed.

There was no evidence to show that a claim has been lodged with the insurance company and that such a claim has been refused. The bank offered to pay the customer the sum of P3522.40 (interest at the time of settlement) inclusive of interest from the date the loan was settled.

Case 4

Complainant is the wife of a deceased former staff member of a bank and a heir to the deceased estate. Initially, the question the Banking Adjudicator was faced with was to consider whether, we have jurisdiction over this matter, that is, whether as a staff matter and in that case “Staff Conditions of Service “prevail. And if not the Banker’s Code of Conduct prevail. If the deceased accounts were converted to commercial rates, then the wife becomes a customer of the bank and not staff. The matter was pursued on discretionary basis by the Banking Adjudicator.

In the process of winding the deceased estate, she got to learn that credit life insurance had not been perfected on the deceased car which was relatively new and therefore the bank required her to settle the lease loan, and she utilised proceeds from the pension of the deceased estate to settle the loan.

It was revealed by the bank that there was an initial requirement by the bank even though not compulsory to have all staff loans covered through credit life. This was held in abeyance because negotiations were still ongoing with the Staff Union as most staff were reluctant to take cover. It was established that the deceased completed and lodged the application forms, with the exception of one which required applicants to confirm that they are “active at work” with the department responsible for processing cover in the bank. It was also discovered that persistent reminders were sent to the deceased to lodge the forms, but later verbally informed officials that he had decided to cancel the cover.

Complainant produced a copy of the ‘active at work’ from the deceased records from home, maintaining that her husband has never told her that he had since decided to cancel the insurance. The bank insisted that the deceased never submitted the form and that “the submission of the insurance documents is not necessarily conclusive evidence that the insurance cover would be approved, by the insurance company even if they were properly completed”. The Banking Adjudicator concluded that he can not assess conflicting evidence or conduct cross examination, and therefore no recommendation may be made on any complaint in which a material fact can not be established, and therefore, this was a dispute of fact case.

Case 5

Complainant was granted a loan of P75000.00 approved at one of the banks branches. The customer had another loan facility, a mortgage loan at the banks head office, and since the complainant had failed to service the mortgage loan the bank had obtained a warrant of execution against him on the property. When the personal loan was granted the Loans Officer at the branch who was processing the loan was not aware of this, neither had the information been relayed to the credit bureau according to the bank’s credit procedures.

Investigations revealed that the complainant was granted the loan which was credited into his account and had started drawing on the facility. An officer at head office of the bank who was responsible for monitoring the account realized a huge deposit in the customer’s account and on enquiry with the branch was advised that the customer had been granted the loan. Immediately the officer reversed the credit and requested the branch to cancel the loan forthwith, without reference or notice to the customer. The complainant only got to know about it when he was trying to make a withdrawal at one of the bank branches.
Findings revealed that the banks systems and processes were not “online real time” and therefore could not adequately inform or make other parties in the branches aware of various activities performed on various accounts simultaneously which, was a cause for this error. The Banking Adjudicator submitted that the bank knew or ought to have known of the dangers such a deficient system without interface can cause and the delay in sharing information within the bank and the credit bureaus.

The bank sought to rely on some provisions of the loan agreement on set-off and default, which unfortunately are not applicable to the new contact. The new contract should be upheld and therefore considered valid. The bank was given two options to consider: time of settlement) inclusive of interest from the date the loan was settled.

  • Reinstatement of the loan

  • Compensate the customer for the charges incurred in the processing of the loan and offer an amount for substantial distress and damages.Amount determined to be discussed and agreed with the customer and if a dispute arises reference to be made to the Banking Adjudicator, whose determination would be binding on the parties.