The National Credit Regulator has accused Wesbank of illegally “coaxing” defaulting customers into handing over their cars to the bank’s appointed recovery agents‚ thus undermining the voluntary nature of the surrender process.
The biggest player in South Africa’s motor vehicle finance market‚ Wesbank — a division of FirstRand Bank — has been referred by the regulator to The National Consumer Tribunal for alleged breaches of the National Credit Act (NCA) following its investigation into the bank’s debt collection practices.
The NCA allows a consumer to voluntarily surrender to the bank a car they’ve bought on an installment agreement or lease when they have defaulted on their monthly repayments‚ thus avoiding the repossession process.
“The investigation by the NCR revealed that Wesbank‚ through its debt collection agents‚ coaxed defaulting consumers into relinquishing possession of their motor vehicles‚” the NCR said in a statement on Thursday.
A credit provider can only repossess a car from a consumer if they have obtained a court order authorising the bank to do so. But many of the bank’s debt collectors opt to avoid the red tape by pursuing the NCA’s “voluntary surrender” process instead.
Responding‚ Wesbank said while it respected the regulator’s decision‚ it disagreed with the conclusions it had reached. ?“This referral does not constitute non-compliance with the National Credit Act but is instead a result of differing interpretation of the applicable legislation‚” the bank said.
“The bank had given its full cooperation to the Regulator over the duration of the investigation‚ which commenced in 2014.
“[We] have a strong commitment towards achieving fair treatment of our customers and will continue to cooperate with the Regulator and the National Consumer Tribunal.”
Many vehicle finance customers — across bank brands — have alleged that they were duped into signing voluntary surrender forms‚ having been told by a collector’s recovery agent that they would merely be handing their cars over for temporary “safekeeping” while they came up with the money they owed; that surrendering the car was a far cheaper option than having it repossessed‚ or that by surrendering their cars their credit records wouldn’t be adversely affected.
The National Credit Act also allows defaulting consumers to apply for debt review‚ in terms of which their credit providers’ debt collecting action is halted‚ and a debt repayment plan is negotiated.
Wesbank’s website is silent on the voluntary surrender option‚ but outlines the logistics of the repossession process.
It lists the costs — to the consumer — of the repossession process as follows: “Storage costs‚ insurance costs‚ valuation costs‚ a tracer fee‚ a towing fee or driver‘s fee‚ repair costs‚ auctioneer‘s fees‚ legal costs and any other reasonable costs incurred.” — Tiso Black Star Group Digital/ConsumerLIVE