South Africa’s latest state capture report recommends the introduction of new banking laws – including regulations around when accounts may be closed.<\/p>\n
The report’s author, chief justice Raymond Zondo, made the recommendations following the closure of four bank accounts linked to the controversial Gupta family.<\/p>\n
First National Bank, Standard Bank, Absa and Nedbank all closed accounts, citing legal obligations, after several suspicious transactions were made. The banks also cited possible reputational damage as a reason for the account closure.<\/p>\n
Zondo raised specific concerns about the\u00a0bank accounts being closed without client consultation, leading to the commission making various findings regarding the ‘unfair’ elements of unilateral bank terminations.<\/p>\n
“In\u00a0Bredenkamp and Others v Standard Bank of SA Ltd\u00a0<\/em>the Supreme Court of Appeal (SCA) decided that a bank was not obliged to hear its client’s side of the story before the bank could terminate the relationship,”<\/p>\n “It seems that the SCA’s basis for this decision was that the relationship between a bank and a client is a contractual one,” he said.<\/p>\n In contrast to the SCA’s decision, Zondo said it is unacceptable that an institution as powerful as a bank should have no obligation to hear what a client has to say before the bank may close the client’s account.<\/p>\n He added that this does not align with South Africa’s constitutional values, and a decision to close a client’s bank could have various far-reaching consequences.<\/p>\n As a result of banks’ enormous power, no serious business would be able to run in the country if bank accounts could be terminated unilaterally, said Zondo. Depending on the size of a company, this could have dramatic effects on people retaining their jobs, he said.<\/p>\n It is only fair that banks be required to afford their clients the opportunity to be heard<\/strong> or to make representations to show that there are no grounds for the bank to be concerned if they are suspected of suspicious behaviour, said Zondo.<\/p>\n Zondo recommended that new laws be enacted to introduce the requirement of ‘fairness’ in bank-customer relationships, or that existing legislation is amended to account for the requirement.<\/p>\n
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