OUTLINE: A case summary is an overview of the OBS’ legal opinion of a certain case.
The purpose of a case summary is to enable you, the bank customer/consumer, to relate to a shared experience and to help you recognise factors that may contribute to a problem in your banking matters that merits lodging a complaint.
THE CASE SUMMARY
Topic: Payment holidays from banks
Mrs Sithole* obtained a personal loan from the bank and in terms of the agreement, her last payment was due on 25 December 2018. She later experienced financial difficulties and in April 2015 she made arrangements with the bank to pay a reduced monthly instalment for a period of six months. Towards the end of the term, she noticed that the bank had extended the repayment term of her agreement for a period of five years, alleging that she requested the same. She strongly disputed having requested, signed or agreed to a restructuring of her account.
The OBS investigation revealed that the bank was unable to furnish any proof that the complainant had requested or agreed to the restructuring of the loan account, as is required in terms of Section 116 of the National Credit Act [No. 34 of 2005]. Accordingly, the OBS determined that the bank should adjust the loan account in order to place the complainant in the same position she would have been in had the restructuring not occurred. This resulted in an adjustment of R64 000.
- A payment holiday is an agreement you may be able to make in advance with your lender allowing you temporarily to pause or reduce your monthly repayments.
- A payment holiday may also take the form of a loan to service the debt for a certain time and amount. This loan will not be paid out to the bank customer’s account; rather, it will be utilised by the bank to service the debt in question.Although certain banks have advertised payment holiday options in the media, bank customers must first contact their banks to clearly demonstrate how they have been directly financially impacted by the coronavirus pandemic. There should be no presumption of a universally applied payment holiday.Customers must ensure that they understand the terms and consequences of any payment holiday.
- Customers are advised not to simply stop making debt repayments due to the coronavirus pandemic, but to first discuss their circumstances and reach a formal agreement with the bank.
- A debit order that you had agreed to pay does not become an unauthorised debit order merely because your financial situation has changed.
- The bank may not make any changes to the terms of your agreement without discussing these changes with you and obtaining your agreement.
*Name has been changed to maintain bank customer confidentiality in accordance with the OBS Terms of Reference.