PREDATORY LENDING - in South Africa and Ireland Note: The two articles below, from South Africa and Ireland, are unrelated except that both relate to the spread of predatory lending. In South Africa, regulators see a need to crackdown on "reckless lending which could leave a borrower with a lifelong financial burden." And in Ireland, refunds are ordered for a variety of scams by a variety of banks. And so it goes... Matthew Lee, Esq. Executive Director Inner City Press / Fair Finance Watch NCRC board member; NCRC blog = www.fairlending.org Tel: 718-716-3540 E: MLee [at] innercitypress.org Email: Matthew.Lee [at] innercitypress.com http://www.mweb.co.za//finance/?p=FinanceNewsArticle&i=207694 Stop rash lending, banks warned 2006-07-26 10:51:36 The banking ombudsman has warned SA major banks against reckless lending which could leave a borrower with a lifelong financial burden. Johannesburg - The Ombudsman for Banking Services is experiencing an increase in complaints from bank consumers who have run into financial trouble after taking up unsolicited offers of credit from the major banks, according to Advocate John Simpson, Complaints Investigation Manager for the Banking Ombudsman. Simpson said that once people started falling behind with their repayments, the interest and legal costs snowballed, often leaving the borrower with a lifelong financial burden. "We suspect, from what we have heard, that the banks are engaging in an all out drive to gather as many clients as they can ahead of the National Credit Act coming into force in June 2007," said Simpson. Simpson said the Act was aimed at stamping out what it called reckless lending, which included entering into a credit agreement that would make the consumer over-indebted. Credit providers would not be permitted to merely increase credit limits without first complying with prescribed formalities. Finance24/SAPA and http://business.iafrica.com/news/780913.htm -- Overcharging banks must refund €118m to customers From:The Irish Independent Wednesday, 26th July, 2006 BANKS are being forced to pay back €118m to consumers they overcharged in a series of scandals uncovered over the past few years. The Financial Regulator has now ordered Allied Irish Bank, Bank of Ireland, National Irish Bank and a range of insurance companies to refund more money to customers than originally estimated. The €118m in refunds has been extracted from the banks since May 2004, with €48m of this paid over to consumers last year alone. The country's biggest bank, AIB, has been told to pay back €34.2m to customers for overcharging on foreign-exchange transactions. So far, the bank has paid more than €21m. Its rival, Bank of Ireland, has had to refund €18m for charging customers too much for payment-protection policies. The bank had originally been told to refund €15m, but the figure was revised upwards. National Irish Bank has so far given its customers refunds totalling €8.3m out of an overall bill of €11.6m for charging them too much interest and overcharging for banking fees. A total of 50,000 customers were charged too much by NIB between 1988 and 1998 in one of the biggest banking scandals to hit the country. The bank is now owned by Denmark's Danske Bank and it has been attempting to put the scandal behind it. Rip-off In all, some 36 different banks and finance firms have been forced to pay out to their customers for overcharging them. Regulators said yesterday that when the banks were unable to trace overcharged customers, the refund money had to be donated to charity. Chief executive of the Financial Regulator, Patrick Neary, warned banks that they would be subject to on-going checks to make sure they were not continuing to rip off customers. And yesterday, a new set of rules was introduced. The Consumer Protection Code will force banks and other finance houses to treat customers fairly. "Institutions will be obliged to have proper controls in place to protect consumers and to correct errors and handle complaints speedily and efficiently," Mr Neary said during the launch of the regulator's annual report for 2005. However, the regulator was accused of caving in to pressure from the banks to water down the new rules designed to protect consumers. The Irish Brokers' Association accused it of supporting retail banks - a charge strenuously denied by Director of Consumer Affairs at the regulator's office, Mary O'Dea. The Professional Insurance Brokers Association (PIBA) said the code exempts a range of basic banking products or services - which includes current accounts, overdrafts, ordinary deposit accounts and term deposits of less than one year - from 'factfinding', 'suitability' and 'reason why' requirements. This means there will be no obligation on the banks to check the requirements of the customer, to recommend a suitable product to meet that requirement, or explain in writing the reasons for that recommendation, the brokers' association said. "This marks a very raw deal for consumers," said Diarmuid Kelly of the PIBA. "Consumers will continue to be overexposed to what are effectively, limited and low-yielding products." But Ms O'Dea of the Regulator's Office defended the code, stressing that it would tighten the rules and level the playing field for consumers. She dismissed claims the regulator was supporting retail banks. "I totally reject that. All decisions made are in support of the public interest and not in support of any particular interest group." The new code was welcomed yesterday by the Irish Bankers' Federation. Charlie Weston © Copyright and Ter http://home.eircom.net/content/unison/national/8537252?view=Eircomnet ID: 37132 Autor(en): NCRC - Matthew Lee Erscheinungsdatum: 31.07.06     URL(s): SA banks stifle competition

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