The South African Ombudsman for Banking Services (OBS) has published a new case as part of its recent annual review.
The case deals with a South African who purchased a vehicle from a dealership, and financed by a bank.
A year after the vehicle was purchased, it came to light that it had previously been stolen. The police confiscated the vehicle from the complainant who then reported the incident to the dealership, and the bank.
The bank eventually cancelled the complainant’s vehicle finance agreement.
“However, the bank refused to refund her all the amounts she had paid towards the vehicle finance account and only a portion was refunded, as she had had the use and enjoyment of the vehicle for a year,” the ombudsman said in its report.
“The vehicle was a stolen vehicle and accordingly this office was of the view that the agreements between the bank and the dealership and between the bank and the complainant were void and that all parties needed to be returned to the same position they would have been in had the agreements not been concluded.
“It was noted that the dealership had repaid the bank the full amount it received from the bank.”
The OBS referred the bank to decided case law wherein the court held that upon repossession of stolen property, the innocent purchaser is entitled to, among others, the repayment of the purchase price already paid and cancellation of the contract of sale.
“The bank could not provide this office with a legal basis in terms of which it was entitled to benefit from this incident and retain a portion of the funds paid to it by the complainant,” the ombudsman said.
“The bank subsequently agreed to refund the complainant in full as per the recommendation of the OBS.”