Parliamentarians from different parties on Tuesday ripped into the country’s banks, questioning their conduct, preferential treatment, lack of transformation, high fees, and arbitrary decision on closing accounts without reason.
The South African Reserve Bank (SARB), its Prudential Authority Institute, the Banking Association South Africa (BASA), Financial Sector Conduct Authority (FSCA), Standard Bank, FNB, Absa, Investec, Nedbank, and Capitec attended the joint sitting of the standing committee on finance and trade, industry and competition portfolio committee to engage the finance sector on issues of transformation, and other related matters that are raised by consumers.
MK Party MP Sanele Mwali said they wanted to raise concerns that the giants in the financial sector ‘perpetuate unfairness and neo-apartheid systems of racist practices post-1994’.
“Why is it that the banks have not closed certain accounts for certain clients because they have taken steps to close certain accounts, to mention a few? We have seen that there have been companies with so much controversy in the financial sector for instance Tongaat, Steinhoff, and Glencor, they have been faced with so much controversy but they still have accounts with these major banks.
“But, Sekunjalo and others have already faced their day in court because they’ve already experienced a closure of their accounts. So what is of great concern is that what you do on the left is not what you do on the right.”
Mwali said this supports the notion that there is still discrimination within the financial sector.
“What you do with the ones with privilege is not what you do with the ones who are marginalised. This does not speak to the agenda of transformation and inclusivity.”
Speaking out on the arbitrary closure of bank accounts, Mwali said: “They just close your accounts without reason, or they just don’t disclose everything they should be disclosing. Our people cannot even appeal this closure.”
He further appealed to the committee to review policies that would address the smaller banking institutions and not have them ruled within the same framework as the major banking institutions.
MK Party MP Brian Molefe said urgent intervention is required to prevent banks from arbitrarily closing the accounts of clients without providing any reasons, and that he is concerned over the lack of a formal adjudication body to oversee such closures, warning that the practice is irrational and arbitrary.
“Banks cite laws that aren’t even South African laws to justify their actions, yet no formal body exists to hold them accountable,” he said.
He further questioned the role of the BASA, arguing that the organisation has failed to ensure fairness and transparency within the sector.
“Shouldn’t banks be subjected to the highest standards, given their critical role in the economy? Why is there no requirement for written reasons when accounts are closed? Clients deserve transparency and legal recourse,” said Molefe.
Molefe called for urgent legislative intervention to regulate banking practices, arguing that banking is a public service and should be governed by laws that protect consumers from arbitrary and unfair treatment.
“South Africa cannot allow a financial sector that continues to serve only a privileged few while shutting out the majority from economic participation,” he said.
Molefe raised concerns about the continued dominance of the white minority in the financial sector, arguing that existing statistics mean little when banking practices remain exclusionary.
“There is an unequal relationship between the banks and clients and yet legally banks can close bank accounts without justification,” said Molefe.
Molefe said that banking was a public service and should be held accountable on the basis that they were granted a banking licence by the state.
“Nobody can function in South Africa without a banking account. It is a public service and right,” said Molefe.
EFF MP Omphile Maotwe, addressing the SARB, called for more robust banking policies, saying high bank charges and questionable ethics should no longer be entertained.
“We as the EFF are bringing the nationalisation of SARB to Parliament and hope that it can be supported,” Maotwe said.
“We need a true monitoring policy. We can’t have the Reserve Bank not playing a critical role. It cannot be that the Reserve Bank is only working on inflation.”
She said the party knows what SARB needs to do to re-industrialise the country.
“We are making a call, as the EFF, that we need the formation of a state bank.”
She also criticised the FSCA and said the BASA was in the pockets of the banks.
Maotwe stated the fact that the bank not only charges its clients for depositing, withdrawing, and a monthly fee was unnecessary, and the only people benefiting were in fact, the banks.
Earlier, the parliamentary standing committee on finance chairperson Joe Maswanganyi said during his opening remarks that the country cannot afford a financial sector that excludes the majority outside the mainstream.
He said engagement concerning access to development finance and the transformation of the South African financial sector was of paramount importance as it pertained directly to the foundational tenets of inclusive economic growth, equitable financial participation, and the broader transformation objectives enshrined in the Constitution and articulated in policy frameworks.
“Reports from oversight engagements have illuminated deeply entrenched structural inequalities that continue to pervade the financial sector.
“Indicators related to black ownership, enterprise and supplier development and access to financial services for historically marginalised communities consistently fall short of established benchmarks.”
He said BASA along with individual banks must be held accountable for their shortcomings in transformation targets, ‘especially regarding ownership, procurement and financial support for black-owned enterprises’.
“It is essential that banks articulate tangible commitments extending beyond mere corporate statements,” Maswanganyi said.
BASA representative, Bongi Kunene, told the joint meeting that none of the BASA members had been found wanting or guilty of racism.
“The law and the code of good practices prohibit members from engaging in discriminatory behaviour.”
Kunene said that regulations were clear on discrimination and that the account closure processes were clear and BASA was not aware why the public did not know the processes followed when bank accounts were closed.
“If a client disagrees, the client can invoke the intervention of the finance Ombuds. This is a question of financial education, and we all ensure that the public is aware of it.”
SARB head of policy, statistics and industry support, Olaotse Matshane, said questions over the mandate of the bank would be discussed by Reserve Bank Governor Lesetja Kganyago at a later stage.
FSCA deputy commissioner Katherine Gibson said the authority should adopt conduct law to make it more streamlined and proportionate.
“It’s about using our supervisory tools to respond to challenges in the sector.
“On transformation, we recognise our role as the FSCA that we can be playing and the stronger enabling law that can be provided in this case, and again we are supporting that through the Conduct of Financial Institutions Bill, National Treasuries Bill.”