When Belinda Holloway tried to apply for a fixed interest rate on her home loan with Standard Bank, she found herself in what you could call a fix. “Every time I phoned the home loans call centre, I was told that the fixed rate wasn’t available,” Holloway says.
After numerous telephone calls, Holloway pressed the bank for an explanation as to why the fixed rate option “wasn’t available”. She was told the bank buys tranches from the Reserve Bank to fund fixed-rate options and that Standard Bank “wasn’t buying”.
“This happened week after week. During one call, the person I spoke to told me that the bank wasn’t offering fixed rates because it wasn’t in the client’s best interests to fix.
“That really angered me because it’s not true. I’ve benefited from fixed rates before. So I said, ‘It is in my interests, and I will decide what is in my best interests. It might not, however, be in the bank’s interest,’” Holloway says.
Frustrated and tired of dealing with a different call centre operator each time she called, Holloway went the following Saturday morning to a Standard Bank branch in Parow, Cape Town, and met Hilda Engelbrecht, the branch manager.
Holloway says that Engelbrecht said she was not aware that Standard Bank was not buying tranches. Engelbrecht telephoned the call centre and was also told there were no tranches available.
With her home loan agreement in hand, Holloway dug in her heels. “I said, ‘This is nonsense and a breach of my home loan agreement, which clearly states that I may at any time apply for a fixed rate, yet the bank is making it impossible for me to apply in times of low interest rates.’”
But Holloway’s reasoning and her refusal to leave the bank bore no fruit – until she threatened to call a tabloid newspaper to invite it to photograph her staging a sit-in at the branch.
“When they realised I was serious, the manager insisted on speaking to a call centre team leader. He ‘checked availability’ and miraculously found that there was a three-year rate.”
Just when things were starting to look up for her, Holloway was advised that her application could not be processed there and then because she has a joint mortgage bond and her husband was not with her, and because such agreements are processed via the call centre only. Holloway would have to apply by telephone on Monday, but availability of the fixed interest rate loan tranche could not be guaranteed, she was told.
Holloway says she protested, insisting that the bank call her husband. She says it was hardly an opportune time: her husband was taking photographs at a wedding.
“They got us both on a conference call and read the terms and conditions to us over the phone. I could hear my husband talking to the bride – clearly not listening,” Holloway says.
The Holloways got their fixed rate – 11.5 percent over 36 months – and, although they had won the battle, they had lost confidence in the integrity of Standard Bank.
“I left the bank that day feeling despondent and distrustful. I don’t want to have to fight with my bank.”
The sorry tale does not end there.
“That was on December 4, 2010. By December 31, I hadn’t received written confirmation of my fixed rate, so I phoned the call centre. They said it had been sent on about December 6. I asked for a copy. They said it was computer-generated and that they couldn’t produce a copy, so I asked for a typed letter confirming the fixed rate. They said they don’t type letters; it isn’t necessary because all calls are logged.
“I was very frustrated. We had entered into a contract. I felt I was entitled to proof of it.”
Holloway had not received a loan statement from Standard Bank, so she did not know if the fixed rate had been applied to her loan.
“Then I asked them: should I wish to take them to court, how would I obtain the documentation I seek. They advised that the court would subpoena them and they would then produce it from the logged calls.
“I asked to speak to a manager, and my call was put through to the complaints department. They said they would escalate it to management,” she says.
Holloway waited 19 days – and still no call from management or anyone else at Standard Bank.
“On January 19, I phoned again and asked to speak to the chief executive, Jacko Maree. I was transferred to his personal assistant, Helga Nel, who undertook to type me a letter.”
But by March 28 Holloway had still not received the letter, so she lodged a complaint with the Ombudsman for Banking Services.
In her complaint, Holloway effectively accused Standard Bank of:
* Misleading information. Holloway says that she was repeatedly misled. Call centre staff claimed the fixed rate facility was not available, because the bank does not buy loan tranches from the Reserve Bank in periods of low interest, and yet a team leader was able to “miraculously produce one” the day she visited the Parow branch. She had been told it was not in her best interests to fix her interest rate, whereas it clearly was.
* Breach of contract. Standard Bank had for months prevented Holloway from applying for a fixed rate, whereas her loan agreement states “you may at any time during the term of this agreement apply for a fixed interest rate option”.
* Poor service. Holloway had been led to believe she had contracted with Standard Bank, but the bank had failed to provide her with proof of this, despite repeated requests for written proof.
Given her loss of confidence in the administration and integrity of Standard Bank, Holloway asked the ombudsman to instruct Standard Bank to carry the cost of the cancellation of her mortgage bond, which she wants to have transferred to another bank.
Edrich Buytendorp, the manager of the assessments department at the ombudsman’s office, says his office cannot give Holloway the resolution she wants – that is, force Standard Bank to cancel her mortgage bond and transfer it at the bank’s expense.
Furthermore, Buytendorp says, his office “does not see the difficulty in obtaining a fixed rate as breach of contract. The issue is not whether you can apply at any time … that was never the issue, and any person is welcome to apply for any facility at any time. The issue is whether it is reasonable to expect that the facility will always be available, and there is no law that requires a bank to give a fixed interest rate. The bank took the commercial decision not to buy tranches at that time.
“As far as this office is concerned, that part of the complaint has been finalised and our file is closed on this matter.”
Buytendorp says he has raised “one more issue” with Standard Bank and is awaiting the bank’s response. “Once this is received, the matter can be finalised, but, ultimately, it will not change the outcome of our decision,” he says.
Asked what the outstanding issue is, Buytendorp says that he cannot comment.
Holloway did eventually receive, via the ombudsman’s office, the letter that Standard Bank had sent to her confirming that her interest rate had been fixed.
The letter had been sent to the wrong address. Holloway attributes this to human error on the call centre side. Standard Bank has her address on the home loan agreement, and the bank’s complaints department had her email address, Holloway says.
Along with the letter was a document containing the terms and conditions, which state that the fixed rate option is subject to availability. The document also states: “Completion of this application form or receipt thereof by the bank does not guarantee our acceptance of the option applied for.”
* Standard Bank says it is investigating the matter in conjunction with the Ombudsman for Banking Services and will respond as soon as its investigation is completed.
IN A NUTSHELL
The take-home message to clients with home loans at Standard Bank is this: you may at any time apply for a fixed rate on your home loan, but Standard Bank may not be offering fixed rates at the time of your application. And although your home loan agreement may state that you are entitled to apply for a fixed rate, this does not mean that Standard Bank is obliged to approve your application.
‘GROUNDS FOR A COMPLAINT IN TERMS OF THE CONSUMER ACT’
Belinda Holloway may have recourse if she takes her case to Mamodupi Mohlala, the National Consumer Commissioner, Elizabeth de Stadler, an attorney in Cape Town who specialises in consumer protection legislation, says.
“The Consumer Protection Act (CPA) applies fully to a case such as this, because it covers the service rendered in the context of a credit agreement,” De Stadler says.
“Section 41 of the CPA says consumers have the right to fair and responsible marketing.
“A service provider must not market any goods or service in a manner that is misleading, fraudulent or deceptive in any way, including in respect of the manner in or conditions on which those goods or services may be supplied, or in respect of any material aspects of the goods or services.
“Failing to disclose a material fact, where that amounts to deception, is outlawed, and to my mind, it is a material fact that the fixed interest rate is subject to availability, so this should be contained in all marketing material,” De Stadler says.
Section 40 of the CPA covers the consumer’s right to fair and honest dealing, she says. “It defines unconscionable conduct. This is when an agent or the supplier of goods or services engages in any conduct that is unconscionable, misleading or deceptive, or that is reasonably likely to mislead or deceive.
“The Act says it is unconscionable for a supplier to knowingly take advantage of the fact that a consumer was substantially unable to protect their own interests because of the inability to understand the language of an agreement, or any other similar factor,” she says.
De Stadler says that being made to agree to complex terms and conditions that are read to you over the telephone, rather than presented to you in writing, can be construed as unconscionable, as can be the conduct of obstructive or simply uninformed call centre staff.
“Consumers should not be made to go through great lengths to try and access a service to which they are contractually entitled. They are at all times entitled to accurate and understandable information.
“The CPA is one of the most far-reaching pieces of legislation that has become part of the law in South Africa. It affords consumers and others very meaningful protection, not least the ability to report prohibited conduct to the National Consumer Commission, which can have the result that the offending supplier has to pay a fine of 10 percent of their turnover.
“However, the consumer rights in the Act are only effective if consumers enforce these rights and use the protections in the Act,” she says.