Hey FSCA, banks have rights too
FSCA commissioner has joined the chorus of dodgy but politically connected businesspeople who cry foul when ‘untransformed’ banks close their accounts
Recently, at the Banking Association of South Africa’s conference on banking ethics, the keynote speaker was Financial Sector Conduct Authority (FSCA) commissioner Unathi Kamlana.
He came out strongly against banks “arbitrarily” closing customers’ accounts, consciously or unconsciously playing into the chastisement à la mode in which various politicians are castigating banks for being “monopolistic” and “untransformed”.
It’s crucial to note that Kamlana did not say that banks should not or do not have the right to close the accounts of their dubious customers. But he invited banks to be procedurally fair, including the ability to appeal, and to be transparent.
Banks should ask if they are being fair to their customers, because “the lack of a bank account can severely limit an individual’s or a business’s ability to engage fully in the economy, affecting everything from receiving and making payments to accessing credit”.
What should banks do, procedurally? “Banks should not simply cite reputational risk; reasons must be concrete and consistently applied to prevent what might appear as arbitrary account closures.”
Frankly, I think this is all wrong. Kamlana seems to be thinking exclusively from the point of view of the dodgy bank client, clothed in the language of human rights. The problem is that if you start looking at it from a rights point of view, surely you need to consider the rights of the honest customers of the bank. Don’t they have some kind of right not to be associated with crooks?
If a bank knows – or even suspects – one of its clients is suspected of fraudulent activity or withholds information about its source of funds, wouldn’t shareholders have a legal claim against the bank if they didn’t close the account and the bank’s reputation suffered? Doesn’t the bank have a right, a duty, to safeguard its integrity?
As it happens, South African banks have suffered enormous reputational damage from the country’s long list of tenderpreneur mafia, dodgy short-cutters, drug dealers, crooks of every description, and even some nationally respected businesspeople.
The FSCA is supposed to be protecting the rights of people who are not politically connected businesspeople, not supporting the dubious arguments of South Africa’s new class of billionaires who slam the race card on the table every time a bank takes action.
The notion that this somehow forms part of the financial inclusion debate is just nuts; from its list of seven million clients, Nedbank suspended 190 suspect client accounts in 2023. Account closures are not playing a big part in financial inclusion – to cite it in this context is just crazy.
If South Africa’s regulators are more concerned about the prerogative of dishonourable rich people than the rights of poor victims – who didn’t get even a passing mention in the speech – it’s no wonder we are still languishing on the Financial Action Task Force grey list.