SHARES in Capitec Bank fell more than 4% on
Wednesday, following news that Summit Financial Partners had sued the
bank over its handling of its multi-loan products. The bank’s shares
shed as much as 4.46%, but made up some ground in late afternoon trading
to close 3.89% down, at R557.
Summit contends that Capitec’s issue of multiloan products contravened the National Credit Act.
This is the second time that Capitec has been challenged on this score.
The National Credit Regulator (NCR) referred Capitec to the National Consumer Tribunal back in 2013 over initiation fees and affordability assessments on its multiloan products.
The NCR lost, because the tribunal ruled the regulator "had no reasonable suspicion to initiate the complaint, and declared the complaint and investigation invalid", NCR company secretary Lesiba Mashapa said yesterday.
The tribunal dismissed the case after it found the NCR did not initiate a "valid complaint or investigation", but had undertaken a general investigation to determine if Capitec complied with the National Credit Act.
Summit has lodged two test court cases, in the Stellenbosch Magistrate’s Court and the High Court in Cape Town, challenging the bank’s handling of the products, saying it did so following the NCR’s failure to act on complaints it made on behalf of a client.
However, the regulator says it did act on the complaints.
"The NCR referred Capitec to the tribunal (this year), based on the Summit complaints," Mr Mashapa said.
Capitec said it would respond to the matter in court. The bank said it no longer offered multiloans, although its cellphone-banking system has an option to access a product called a "multiloan/credit facility".
In court papers, Summit alleges Capitec flouted the National Credit Act and its own credit policies by granting loans to consumers without conducting the required credit assessments.
Lenders must assess a borrower’s understanding of the costs of the loan, the borrower’s debt repayment history, and his or her ability to repay debt.
In the case before the Stellenbosch court that Summit CEO Clark Gardner said was a trial run on one customer, Capitec is alleged to have granted multiloans based on three questions being asked at an ATM.
The bank merely asked if the customer’s income had not decreased, expenses had stayed the same, and if the customer was in arrears to any credit provider. The customer’s responses were not verified against payslips, bank statements, and credit checks, according to Summit.
"Capitec has yet to file a plea, after which a process of discovery takes place prior to getting a court date," said Mr Gardner. "We aim to use the case to prove the illegitimacy of these loans."
Summit contends that Capitec’s issue of multiloan products contravened the National Credit Act.
This is the second time that Capitec has been challenged on this score.
The National Credit Regulator (NCR) referred Capitec to the National Consumer Tribunal back in 2013 over initiation fees and affordability assessments on its multiloan products.
The NCR lost, because the tribunal ruled the regulator "had no reasonable suspicion to initiate the complaint, and declared the complaint and investigation invalid", NCR company secretary Lesiba Mashapa said yesterday.
The tribunal dismissed the case after it found the NCR did not initiate a "valid complaint or investigation", but had undertaken a general investigation to determine if Capitec complied with the National Credit Act.
Summit has lodged two test court cases, in the Stellenbosch Magistrate’s Court and the High Court in Cape Town, challenging the bank’s handling of the products, saying it did so following the NCR’s failure to act on complaints it made on behalf of a client.
However, the regulator says it did act on the complaints.
"The NCR referred Capitec to the tribunal (this year), based on the Summit complaints," Mr Mashapa said.
Capitec said it would respond to the matter in court. The bank said it no longer offered multiloans, although its cellphone-banking system has an option to access a product called a "multiloan/credit facility".
In court papers, Summit alleges Capitec flouted the National Credit Act and its own credit policies by granting loans to consumers without conducting the required credit assessments.
Lenders must assess a borrower’s understanding of the costs of the loan, the borrower’s debt repayment history, and his or her ability to repay debt.
In the case before the Stellenbosch court that Summit CEO Clark Gardner said was a trial run on one customer, Capitec is alleged to have granted multiloans based on three questions being asked at an ATM.
The bank merely asked if the customer’s income had not decreased, expenses had stayed the same, and if the customer was in arrears to any credit provider. The customer’s responses were not verified against payslips, bank statements, and credit checks, according to Summit.
"Capitec has yet to file a plea, after which a process of discovery takes place prior to getting a court date," said Mr Gardner. "We aim to use the case to prove the illegitimacy of these loans."
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