The Ombudsman for Banking Services (OBS) will not be able to help you with complaints against your bank about shoddy construction work when you build a home.
The OBS receives a constant trickle of complaints from mortgage bond-holders who are dissatisfied because their banks have not supervised the quality of the construction work.
Neville Melville, the OBS, says mortgage bond-holders are often under the impression that their bank's assessor will check the quality of the building work and alert them to any potential problems or errors.
However, Melville says, the Code of Banking Practice clearly states that a bank will not be responsible for any issues relating to building quality. Any assessment done by the bank will only relate to the value of the security for the bank.
In one case handled by the OBS, the complainant applied for a building loan during 2004. The complainant's husband was to be the owner-builder.
The complainant alleged that the bank never advised them about the requirements of the National Home Builders Registration Council (NHBRC), and the bank registered the bond at the Deeds Office in April 2005 without verifying whether the NHBRC's requirements had been met.
The NHBRC has a number of requirements governing when a builder must register with the council, and the OBS recommends that anyone who wants to build a home should approach the NHBRC for information.
To comply with the NHBRC's requirements, the complainant and her husband subsequently had to pay a late enrolment fee and place R66 000 in a trust for five years to cover any future structural problems. The complainant had to take out an overdraft to raise this amount and, as a result, could not complete the building. She furthermore could not afford the overdraft.
During mediation, the parties agreed that the bank pay R20 000 for damages suffered and change the overdraft interest rate to the prime lending rate.
In 2005, complaints about mortgage bonds ranked highest on the list of files opened at the OBS (791 files or 19 percent of the total), Melville says.
So far this year, he says his office has opened 2 493 complaint files, of which 420 (or 17 percent) relate to mortgage bond finance.
- For more information visit www.obssa.co.za or phone 0860 800 900.