Its now easier for SA customers to take legal action against banks – News24

Its now easier for SA customers to take legal action against banks – News24

Some of SA’s
biggest banks have agreed to remove clauses that precluded their conveyancing firms from
representing said banks’ clients in legal action brought against them, the Competition Commission
said on Friday.

Additionally,
steps have been taken to remove restrictive clauses that could potentially have
excluded smaller firms from the market.

Standard
Bank, Investec, FNB and Nedbank have all agreed to amend their standard agreements with conveyancing
firms after two years of engagements, the antitrust body said. This was in
response to concerns the Commission raised over the relationship between banks
and conveyancers, which surfaced after a customer named Michael Monthe filed a
complaint against Standard Bank in 2018.

Monthe had
stated in his complaint that he had approached several law firms in a bid to
institute action against Standard Bank, but alleged that the law firms he
approached had been unable to take his case on the basis that they were on the bank’s panel of conveyancers and representing him have
been in conflict with their Service Level Agreements (contracts) with the bank.

The
Commission said it found that similar, restrictive service contracts existed at other
banks, namely Investec, FNB and Nedbank.

“Following
the engagements between the Commission, Standard Bank, Investec, FNB and
Nedbank, it was agreed that contractual clauses that prevented law firms
appointed to provide conveyancing services from acting against the banks on any
matter should be removed,” it said.

The Commission addressed
three key issues, the first being conflict of interest provisions in the contracts
between banks and conveyancers.

“The
problem with such clauses is that consumers would have limited choices of law
firms in matters involving banks, especially if they are broad and not only
limited to conveyancing matters,” it said.

Standard
Bank, FNB, Investec and Nedbank have all amended the conflict of interest clauses in their service level agreements.

The second
issue related to the duration of the contracts between banks and conveyancers,
which has been reviewed; and the third was the fact that some banks required
minimum investment amounts as criteria in the attorneys’ performance
scorecards.

“The
investment criteria can be a barrier to entry for small conveyancing firms
seeking to enter this market, particularly if they do not have the requisite
trading history or financial capital,” the Commission said.

All four
banks have committed to either removing the investment criteria for small firms
or entirely exempt members of the Black Conveyancers Association (BCA) from
their investment requirement.

Compiled by Marelise van der Merwe

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