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Reckless Credit

The employers of an elderly, illiterate, widowed domestic worker helped her to take out a bond and to repay it in full.
After the account was settled, a family member asked her to apply for a R68 000 bond and to give the money to him. He undertook to repay her bond instalments, but reneged. She feared that the bank may repossess her house.
She alleged that the bank granted the bond recklessly given that she was a widow, 62 years of age and earning just R1 900 a month.
The complainant wanted the bank to accept a reasonable settlement offer and to provide documented proof that her family member received the funds so that she could lodge a civil claim against him.
The bank highlighted that the bond was approved before the NCA was implemented and that it was granted at the bank's commercial discretion, in line with its applicable credit policies at the time.
The bank confirmed that the bond file was destroyed in a fire, but that computer records revealed that affordability was not an issue at the time of application and that the complainant signed acceptance of the 20-year repayment term.
Due to the time lapse, the bank was not able to provide account statements reflecting the disbursements to the complainant's family member.
The OBS decided that, NCA aside, the Code of Banking Practice expected a bank to grant credit responsibly.
Even if the complainant qualified for the bond according to her income, the office felt that the bank's decision represented a considerable credit risk. While acknowledging that the complainant was naive and contributed to her own predicament, the Ombudsman asked that the bank reduce the outstanding balance. It agreed to a 50% reduction, which the complainant accepted.
Given the absence of records, the office suggested that the complainant subpoena her family member's account statements directly from him to prove that he received the funds from her bond account.

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