FNB accused of discrimination

ALLEGED: BLACK CUSTOMERS CHARGED MORE

Bank must prove treatment of ‘low-cost’ and ‘high-cost’ mortgage clients was not biased.

Bank must prove treatment of ‘lowcost’ and ‘high-cost’ mortgage clients was not biased.

Usury expert Emerald van Zyl has waged a nearly 10-year fight against alleged banking abuse. Now, he is asking the Cape Equality Court to rule that FNB’s FirstRand Finance Company discriminated against more than 4 000 black clients by charging them 30% to 40% more than white clients on mortgage loans. The total claim is likely to exceed R3 billion.

The claim relates to mortgage clients of the former Saambou Bank, later taken over by FNB.

Van Zyl said he has substantial evidence of discrimination by other banks, too. He wants the Equality Court, where the burden would be on FNB to prove it didn’t discriminate, to hear the case.

In 2005, he appeared on TV programme Carte Blanche accusing the bank of overcharging interest on thousands of mortgage loans. FNB admitted the overcharges and refunded customers R154 million.

In 2002, FNB acquired R8 billion worth of Saambou mortgages, of which R2.6 billion was for low-cost housing. In 2010, Van Zyl received a leaked Saambou customer database showing about 80 000 customer accounts, of which 23 000 were low-cost housing clients. Retired sociology professor Cornie Groenewald’s research estimated 99% of these low-cost units were black-owned.

Van Zyl found they were being charged 30% more than high-cost housing clients. FNB has refuted the discrimination charges, in part as there’s no reference to customer race in the Saambou database Van Zyl acquired.

Van Zyl said any reference to “low-cost” and “high-cost” housing in Saambou’s internal documents was code for black and white customers. It was claimed this discrimination started in 1998.

Van Zyl has complained to the SA Human Rights Commission about FNB customer Simon Michaels of Mitchells Plain, who took out a 20-year home loan for R64 000 in 1996. After 21 years, his outstanding balance was R77 000. This was due to discrimination, Van Zyl’s complaint stated.

In his Equality Court affidavit, Van Zyl presented evidence that “high-cost housing” [white] customers would benefit from interest rate drops, but not “low-cost” [black] customers with mortgage loans under R220 000. The interest rates charged to several black customers cited in his affidavit were kept at the old, higher rate.

A Munro Consulting Actuaries report analysed 75 000 loan agreements: 58% owned by whites, 1% Indians, 10% coloureds and 31% blacks.

It found white clients with loans over R150 000 paid on average 1.1% below prime, while black and coloured clients paid 0.45% below prime. On loans under R100 000, white clients paid 0.75% above prime and black and coloured clients 2% above prime. The same pattern was found in other product categories.

In the Equality Court in August 2018, Andrew Strachan of Norton Rose Fulbright, deposing for the bank, said it could not be guilty of discrimination before June 2003, when the Promotion of Equality and Prevention of Unfair Discrimination Act came into effect.

The judge advised Van Zyl to amend his pleadings accordingly. The case will likely be heard next year.