Banks’ contractual right to close acounts
WHEN banks closed the Guptas’ bank accounts three years ago, it signalled the end of their crooked empire in South Africa.
No bank wanted to be associated with their dirty money.
Last month, Reserve Bank Governor Lesetja Kganyago spoke about the saga – and the political pressure that was exerted on the central bank after the Guptas’ bank accounts were closed.
Kganyago told the Stavros Niarchos Foundation that the central bank was pressured to force the banks to reconsider the closures, because they had made it nearly impossible for the family to run its operations .
What does it mean for the rest of us? Ordinary clients are just as likely to rub their banks up the wrong way and risk their accounts being closed.
Mike Cahill says his bank bullied him, after he had a run-in with a surly staff member in a branch.
Cahill had visited the Watercrest branch in Waterfall, Durban, to initiate a new PIN and to get access online for a new business new card.
He says he was greeted by a surly employee who, after explaining what he needed to do, simply walked away without saying a word.
“A second much happier employee asked me how she could help and duly completed half her task. The other half she was unable to finalise and asked the first employee I saw to assist. To my surprise, this employee asked how she could help and I then repeated my request – the second time to her and the third repeat since I walked in.” By this stage, Cahill was annoyed. When she picked up on my unhappiness, she then walked away from her workstation and didn’t solve my simple issue.”
Then, a month later, he received a “termination of contract” letter.
“When I queried this, I was asked to meet the area managers and informed that there were racist allegations made against me, hence the termination.”
When asked about the matter, FNB refused to be drawn on it, citing “client confidentiality”.
A spokesperson, Dumi Shiburi said: “FNB can confirm that reasonable notice is provided in writing to a client when the bank elects to exercise its contractual right to terminate a relationship.”
What does it mean for ordinary clients? Can banks summarily close an account in this manner?
Apparently, they can. Banking Ombudsman Reana Steyn told me that it was possible because banks can end their relationships with clients at any time.
“However, the only legal requirement is that they cannot do so without giving reasonable notice.
“It is clear from the law and the Code of Banking Practice that the bank has a duty to notify you that it has decided to close your account. What constitutes ‘reasonable notice’ will depend on the type of account and the circumstances of each case.”
She says a bank does not have to explain why it is closing a customer’s account.
“It only has to give sufficient notice – which is not a fixed period, but will depend on the circumstances of each case.”
Steyn says customers can always submit a formal complaint to the bank, which will then be dealt with by a separate division.
I then repeated my request – The second time to her and the third repeat since I walked in
Mike Cahill