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ABSA To Pay R10 Million in Fine Over R699 Car Scheme

Consumers who were part of the R699 car scheme can look forward to some benefits in the wake of a settlement agreement between ABSA and the National Credit Regulator (NCR).

When consumers received vehicles at reduced rates in exchange for featuring advertising on their vehicles the company (Satinsky) were acting as agents for ABSA. In the wake of the collapse of the scheme in 2014, many consumers were unable to afford the full cost of credit each month without the additional income of the advertising. It is said that 24 000 consumers were affected.

The NCR investigated the incident in the wake of the collapse and because of all the media attention and made allegations of reckless lending. They then took the matter to the National Consumer Tribunal (NCT). Here they accused ABSA of allowing consumers to gain credit without all the proper checks and balances as required by the National Credit Act. Particularly, they accused the scheme’s agents, who acted for ABSA, of fudging consumers household expenses, ignored the fact that some were in arrears on other large credit agreements and did not conduct proper affordability assessments.

R10 Million is … Fine?

After a long time before the tribunal an agreement has been reached that will see ABSA pay R10 million in fines, in regard to the R2.8 Billion involved in the scheme and possible reckless credit.

Those championing the rights of the consumers involved have expressed some disappointment with this fine amount saying that it will have little effect on the credit provider and will not deter the same behaviour in the future. They also worry about who will benefit.

‘an agreement has been reached that will see ABSA pay R10 million in fines’

Benefits to Consumers

Those affected by the scheme will hopefully all soon find some relief in regard to the matter one way or another but it is somewhat unclear who will benefit most. According to statements made in Parliament about the settlement agreement adverse listings on credit bureaus about these vehicles will be removed, court action about these cars will be stopped or rescinded, and much of the arrears fees and charges on each account dropped. In an effort to get the credit provider its funds back, the credit agreements will be reviewed and the repayment amounts restructured to allow consumers to once again resume payments and retain use of the vehicles.

ABSA will now submit a full audit report to the NCR and only then consumers will be contacted and informed of the new arrangements. ABSA have said that, though legally unable to disclose all the details, have come to a “mutually acceptable resolution” to the matter with the regulator. ABSA have also restated their commitment to “acting in the right way” and to “treating [their] customers fairly”.

All/Some/only 70

There seems to be some confusion about whether the settlement agreement will relate only to the specific 70+ matters the NCR investigated and found irregularities with (out of a sample of 200 cases) or if it will extend to all 24 000 consumers involved and thousands of complaints lodged with the Regulator. It seems that the particular benefits outlined in the NCR settlement might only relate, at first, to the +-70 odd consumers where the NCR investigation found problems. If so, that leaves many thousands of others by the wayside. Some politicians are already threatening to lodge complaints if the benefits are not extended to all involved. They have warned that they may lodge complaints not only against the credit provider but also against the NCR itself, for failing to investigate fully, if all do not benefit.

‘Some politicians have even begun to encourage consumers to stop paying these agreements’

Some politicians have even begun to encourage consumers to stop paying these agreements at this point so that the matters have to be taken to court and determinations of reckless lending could then be made for each consumer. Any court hearing a matter may make a determination of reckless credit and can (1) write off or (2) postpone the repayment of the debt.

Satinsky Next

The NCR say they have also lodged a case against Satinsky (trading as Just Group Africa) at the NCT and are now waiting on a hearing date.