Regulator's alert to bond holders
CONSUMERS who bought houses before June 1 2007 are urged to check their bank statements to establish whether they have been overcharged on their home loan administration fees.
The administration fee on the home loan is R5. Any amount exceeding that, spells overcharged.
If you have been overcharged in excess of R5, please approach the National Credit Regulator or your bank to have the overcharged amount reversed.
In a further boost for consumer rights, the Supreme Court of Appeal (SCA) has ruled in favour of the regulator in its case against Standard Bank.
The bank was charging excessive administration fees on home loans that were granted under the Usury Act 73 of 1968, before the National Credit Act (NCA) came into operation.
Annemarie Friedman, senior legal advisor at the regulator says this case was brought to the courts after it received several complaints against Standard Bank for charging home loan administration fees in excess of the maximum allowed by the Usury Act.
The Usury Act stated that no money lender could, as it regards a money lending transaction charge a borrower an amount exceeding the sum of R5 (excluding VAT) for administration fees, Friedman said.
"We started investigating Standard Bank after we received complaints from Standard Bank home loan clients about the excessively high administration fees that Standard Bank introduced to existing home loan agreements following the introduction of the NCA", she said.
The Usury Act was repealed by the NCA body. Despite the repeal of the Usury Act, the NCA included certain transitional provisions relating particularly to pre-existing agreements under the Usury Act.
The NCA makes some of its provisions applicable to pre-existing credit agreements that would have been subject to the NCA had it been in effect when those agreements were concluded, she said.
These provisions do not expressly deal with home loan administration fees.
Standard Bank argued that these fees are therefore unregulated, Friedman said. But it was the regulator's argument that won the heart of the presiding judge, Friedman said.
The credit regulator argued that Standard Bank could not charge home loan administration fees in excess of the maximum amount of R5 as set out in the Usury Act, she said.
"The SCA favoured this argument and held that Standard Bank is not entitled to charge an administration fee on home loans that existed at the time the NCA came into operation in excess of the maximum fee in the Usury Act until that fee is amended under the powers conferred by section 105(1) of the NCA," she said
Since the NCA came into operation, the minister (of Trade and Industry) has not increased the home loan administration fees and the maximum of R5 is, therefore, still applicable, Friedman said.
"Consumers who entered into home loan agreements prior to June 1 2007 when mortgage amounts were less than R500,000, should check their bank statements to establish whether they have been overcharged on their home loan administration fees and should approach the NCR or Standard Bank", Friedman said.
- This article was first published in the printed newspaper on 10 December 2012