SA customers can now easily take legal action against banks.
South Africa’s Competition Commission on Friday said some of country’s biggest banks have agreed to remove clauses that precluded their conveyancing firms from representing said banks’ clients in legal action brought against them.
Steps have been taken to remove restrictive clauses that could potentially have excluded smaller firms from the market, it added.
Nedbank, Investec, Standard Bank and FNB have all agreed to amend their standard agreements with conveyancing firms after two years of engagements, Commission said. This was in response to concerns the Commission raised over the relationship between banks and conveyancers, which surfaced after a customer named Michael Monthe filed a complaint against Standard Bank in 2018.
The customer, Monthe had stated in his complaint that he had approached several law firms in a bid to institute action against Standard Bank, but alleged that the law firms he approached had been unable to take his case on the basis that they were on the bank’s panel of conveyancers and representing him have been in conflict with their Service Level Agreements (contracts) with the bank.
Other banks namely Investec, FNB and Nedbank, the Commission said, have similar restrictive service contracts.
“Following the engagements between the Commission, Standard Bank, Investec, FNB and Nedbank, it was agreed that contractual clauses that prevented law firms appointed to provide conveyancing services from acting against the banks on any matter should be removed,” it said.
The Commission addressed three key issues, the first being conflict of interest provisions in the contracts between banks and conveyancers.
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“The problem with such clauses is that consumers would have limited choices of law firms in matters involving banks, especially if they are broad and not only limited to conveyancing matters,” it said.
The four banks mentioned have all amended the conflict of interest clauses in their service level agreements.
The second issue related to the duration of the contracts between banks and conveyancers, which has been reviewed; and the third was the fact that some banks required minimum investment amounts as criteria in the attorneys’ performance scorecards.
“The investment criteria can be a barrier to entry for small conveyancing firms seeking to enter this market, particularly if they do not have the requisite trading history or financial capital,” the Commission said.
Nedbank, Investec, Standard Bank and FNB have committed to either removing the investment criteria for small firms or entirely exempt members of the Black Conveyancers Association (BCA) from their investment requirement.
SA customers can now easily take legal action against banks with these changes that the Commission has achieved.