Banks must warn clients before 'freezing' accounts
Business Report, The Star. March
Johannesburg - Banks that decided to close or 'freeze' private or business accounts, for whatever reason, must afford clients sufficient notice to make alternative financial arrangements, banking adjudicator Neville Melville said yesterday.
A bank should firstly formally notify the client of its intention to close the account, he said.
South African law and the code of banking practice indicated that it was usually insufficient to warn a client that the account might be closed simply because certain conditions were not complied with.
The notice should be presented in writing, informing the customer of the date the bank intended closing or 'freezing' the account, Melville said.
He said reasonable time frames must be given so that people were able to make other plans for their financial needs.
Melville recommended that banks give personal account holders between two and four weeks notice of its intentions, while businesses should be notified one to two months in advance.
However, the nature of the accounts and the number and type of transactions had to be considered when stipulating the date on which the account would be closed.
Melville said he had recently issued an advisory containing recommendations.