Equality court tosses out discrimination case against FNB

But the fight is not over. Next stop is the Human Rights Commission.
The Cape Equality Court has dismissed a claim of racial discrimination against FNB. Photographer: Nadine Hutton/Bloomberg

The Cape Equality Court last week tossed out a claim of racial discrimination against FNB brought by usury expert Emerald van Zyl on behalf of several black customers of the former Saambou Bank, which was taken over by FNB in the 1990s.

The claim of discrimination was based on a Saambou customer database leaked to Van Zyl in 2010. His affidavit before the court suggested a pattern of discrimination against black customers who he said were being charged up to 30% more than white customers for their mortgage loans. There was no reference to the race of customers in the database, but Van Zyl argues this was coded by the use of “low-cost housing” (black) and “high-cost housing” (predominantly white) clients.

Research by retired sociology professor Cornie Groenewald concluded that 99% of the low-cost housing Saambou clients reflected in the database were black.

In a statement issued last week, FNB said it welcomed the Equality Court’s dismissal of the race discrimination case. “The Court dismissed the matter in its entirety, including the complainant’s application to amend their declarations.”

Commented chief executive of FNB Home Finance, Lee Mhlongo: “We’ve always maintained that the callous use of racial allegations is irresponsible and unacceptable. There has never been any evidence to suggest that race played any role in Saambou’s determination of interest rates for its customers.”

Judge Fortuin described the evidence as “vague and embarrassing” and appeared to take exception to the wide media coverage given to the case. The Equality Court was established in 2003, and the judge said the court did not have jurisdiction to consider cases that occurred prior to this date.

But Van Zyl says the merits of the case have yet to be heard, and he will now approach the SA Human Rights Commission (SAHRC) to deliberate on the case. “We have a few options available to us. One of them is to appeal the judgment. Another is to approach the SA Human Rights Commission or the Constitutional Court. We will consider our options over the next few days. We have already presented evidence to the Human Rights Commission in terms of one FNB customer.”

Indirect discrimination

The SAHRC has approached Stellenbosch University’s Law Clinic for legal assistance on the case alleging discrimination. Says the Law Clinic’s Stephan van der Merwe: “It is correct that we were consulted by the SAHRC who requested our assistance on the matter. We confirmed that we are willing to co-operate if there is sufficient merit. From what we have been informed, we are concerned that there may be reason to suspect indirect discrimination in the matter.”

Indirect discrimination is where there is a practice, policy or rule that applies to everyone in the same way, but has a worse effect on some. For example, if people living in a particular area are charged high interest rates and are also of a particular race, that could be considered indirect discrimination.

FNB says cases related to these racism allegations have been dismissed by the courts on four separate occasions since 2013, including the Supreme Court of Appeal.

Van Zyl says he has assisted 1 570 clients from having their houses sold in execution by the banks. Of these, 179 were black Saambou clients. Most of these cases were heard in the high courts, where Van Zyl says he was able to show that the banks had discriminated against clients by not reducing interest rates for low-cost housing clients when prime lending rates were dropped for other customers.

FNB says the allegations were first dismissed in 2013 by the North Gauteng High Court. The court found that, after all the evidence had been led and all witnesses cross-examined, the claims that Saambou charged black people higher interest rates than white people were “completely unfounded”. Van Zyl replied that in this case racism was not pleaded. The claimants in this case, who happened to be black, argued that the interest rate they were charged was not fair and reasonable and exceeded the amounts permitted by law.

“As a responsible corporate citizen, FNB has been and will always remain committed to ensuring that customers are treated fairly,” says Mhlongo.



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Suggest Van Zyl adjusts his argument slightly; the bank will NEVER openly, overtly, distinguish between races (unlike Discovery Bank) when it offers products and home loan products.
However, take FNB’s so-called “Step-Up” mortgage bond product of around 2008/2009; it was specifically marketed to FIRST-TIME home buyers and as part of final bond approval, applicants were required to attend a National Credit Regulator workshop – sms’s were sent to applicants with the date and venue of the workshop.
It just so happens that 95% of FIRST-TIME buyers at that workshop who were all FNB Step-Up FIRST-TIME home buyers / mortgage bond applicants, were young coloured people from Cape Town. My white daughter who was buying along with myself who accompanied her, were the only whites at the workshop of about 20 people.
As it turned out, the product was supposed to NOT have bond admin charges upon registration – this was also stipulated in the contract. However, on the day the bond was registered there WAS INDEED an admin charge. The only reason we knew this was because we SPECIFICALLY REQUESTED from FNB a statement from date of registration(of bond) to check each cost. Part of the product offering was 6-monthly statements, so had we not requested the statement, that transaction would most likely have slipped through without detection.
When the bond was cancelled and the property sold, obviously FNB’s Settlement Amount was inflated….
So that’s when it necessary to inform one’s transferring attorney to step in to arrange the necessary refund…..

Well spotted Louise. I bank with FNB, as does my small business. So I got pestered about a bond for a rental property and reluctantly included FNB in the comparison where they were somewhat cheaper than other offers. So we took it up only to find that costs had changed from those quoted, both the fees and interest rate. Sneaked in on changed documents for signature so delays, wrangling and finally a reluctant, arrogant compromise.

Never again.

The content at the NCR / FNB regulator bothered me immensely; given the likely diminished level of financial literacy of young people – my daughter included – it was not accurate to leave the applicants to believe that their only recourse in the event of a dispute was ONLY the bank’s internal review mechanism and the banking ombudsman. Their right to go to court and sue the bank for anyone with the necessary documentary proof and funds, was never mentioned.

What is he trying to achieve? What a waste of money, time and effort. Let Van Zyl rather take Discovery Bank to court for treating their white and black customers differently.

Indirect discrimination? So you’re proposing testing all variables for any race differentiation. Yeah.. good luck with that in South Africa… Soon you’ll be providing credit based only on the applicant’s name.

I am an FNB client myself and when I recently wanted to enter the property market I contacted them to obtain a bond. I saw on their website that they had a bond for first time buyers where the purchase amount was below a certain amount that had additional benefits. I enquired about this product and was told my salary was too high. But I then worked out that if someone applied and got the maximum loan amount on this product, their repayment would be more than a third of the clients monthly salary. How can this be allowed?

End of comments.





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