John Vaughan (Financial Advisor @ Lucid Living)
In a recent article (Banks Protest Consumer Protection Act) we highlighted bank’s intentions to circumvent certain provisions of the Consumer Protection Act (CPA).
The Reserve Bank, on behalf of SA’s retail and commercial banks, made an application to the Department of Trade and Industry (DTI), to have the banks granted an exemption from various provisions of the CPA.
Banks were particularly concerned about the implications of section 14 of the CPA – which allows consumers to cancel fixed-term contracts (irrespective of their intended term/duration) at anytime, by giving 20 business days written notice.
On the 27th of June 2011 – the DTI issued a notice, exempting all Banks (registered in terms of the Banks Act), Mutual Banks (registered in terms of the Mutual Banks Act) and Co-operative Banks (registered in terms of the Co-operative Banks Act) from the provisions of section 14 of the CPA.
What Does This Mean?
Consumer’s will not be allowed to cancel fixed-term bank agreements (e.g. 24 month fixed term deposits), on 20 days written notice – at anytime prior to the expiration date of the agreement.
The CPA was welcomed as a critical piece of legislation, that would finally level the playing fields between consumers and service providers, through enhanced accountability, transparency and stronger consumer protection.
By conceding to the bank’s application for exemption – consumer’s have been dealt a blow that tilts the balance of the playing field, once again, in favor of service providers. The decision by the DTI highlights the significant influence that banks have over government – so much so, that consumer rights take a back seat to commercial ends. Of most concern, the DTI has pandered to the whims of an industry that has come under scrutiny and condemnation – from the Jali Commission Report – and have in the five years since the report, done little or nothing to change “unfair practices”.
I’m quite certain that the section 14 exemption, is only the first of a long list that will be applied for (and probably granted) by the banks. It is disheartening to witness, the ease with which consumer rights are eroded – before they can even be exercised – to protect the interests of big business.