Capitec CEO Gerrie Fourie says the bank is ready to go to court to challenge claims from Summit Financial Partners that it is offering unsecured loans in a manner that amounts to \u2018reckless lending\u2019.<\/p>\n
Speaking in an interview with Bloomberg<\/a>, Fourie said the bank will submit responding documents to court early next month challenging Summit’s claims, confident that the bank will win the case – though he remains concerned about reputational damage.<\/p>\n Earlier this month,\u00a0Summit Financial Partners\u00a0moved to sue\u00a0Capitec, saying that its customers were able to borrow up to R5,000 each month under\u00a0a loan\u00a0product, which has since been discontinued.<\/p>\n Instead of being a short-term loan, the product was closer to a credit facility, or revolving credit account, Summit said.<\/p>\n The financial advisory firm, which helps its clients sort out debt problems, said that Capitec also charged a fee each time a customer took out a loan.<\/p>\n It accused the bank of failing to conduct affordability checks on its customers who took up successive short-term loans.<\/p>\n Capitec defended the loan in question, noting that it was\u00a0a one-month loan similar to what other banks provide and is structured to enable easier access for clients.<\/p>\n The bank\u00a0said that the court charges were brought due to this\u00a0fundamental misunderstanding of how the product worked, adding that the\u00a0product was discontinued and replaced with a credit facility in 2015.<\/p>\n According to Fourie, Capitec would “love to get out of this (small loan) market\u00a0because it\u2019s completely unprofitable\u00a0–\u00a0but South Africans want these types of loans.\u201d<\/p>\n Capitec has been subject to a number of claims around unsecured lending, and is currently involved in a second investigation with the\u00a0National Credit Regulator.<\/p>\n It said the Summit case will likely be resolved within a year, but noted that the NCR case could take longer.<\/p>\n Capitec hits back at \u2018reckless lending\u2019 claims<\/a><\/strong><\/p>\n Capitec hit with \u2018reckless lending\u2019 charges<\/strong><\/a><\/p>\n South African bank ranked best in the world<\/strong><\/a><\/p>\nMore on Capitec<\/h3>\n