FSCC and SACP: JOINT STATEMENT ON THE AFRICAN BANK CRISIS
Sunday 10 August 2014
The Financial Sector Campaign Coalition (FSCC) and the South African Communist Party (SACP) have learned with shock, but not surprised, by the news of the loss of market value experienced by African Bank. We are shocked because the regulators, the South African Reserve Bank in particular, "assured" us that there was nothing untoward when we raised concerns about the business model of African Bank, reckless and unsecured lending practices. We are not surprised because we both warned and campaigned against reckless and unsecured lending - financial practices that cause debt trap and distress in households and crisis in the economy.
The FSCC and SACP raised concerns in 2012-13 with the rise of unsecured lending. We were also and remain particularly concerned with the methods of debt collection by the unscrupulous lenders. The National Credit Regulator (NCR) had to step in and investigated the African Bank, which it found guilty of reckless lending practices. Having dared to move into this space and speak truth to the financial powers that be, they are to date, still paying the price of their bravery. The NCR's powers have been curtailed through twin peaking model, their budget was reduced by 40%, and they are unable to carry out their mandate without hindrance.
When the Chairperson of the FSCC and SACP 2nd Deputy General Secretary Comrade Solly Mpaila took to the public to raise the concerns regarding the business practices of African Bank he was laughed off as an alarmist by none other than Mr Lesetja Kganyago, Deputy Governor of the Reserve Bank. In his usual condescending attitude, he even invited the FSCC for tea in an attempt to explain what the coalition "did not understand". Today, the beast is in the open, African Bank's model is collapsing and millions of consumers are left exposed.
Where is Mr Kganyago?
He owes us and the country an explanation.
We remain convinced that the African Bank is not an isolated case just as the credit crunch of 2008 was principally caused by reckless and unsecured lending practices. The ripple effect of the crunch was felt across the globe. In our case we were cushioned by the National Credit Act, a product of our joint campaign which prohibits reckless lending practices. The act and the findings of the NCR's tribunal notwithstanding, African Bank, and the entire financial sector, still continue with reckless, unsecured lending practices. We are not alarmists as the Deputy Governor of Reserve Bank would in all likelihood retort.
Reckless lending practices must come to an end! Rather than support practices that cause crisis, the Reserve Bank must combat such practices and prove to be independent from private financial interests.
Had the NCR been allowed to exercise its authority and put an end to these practices, consumers would have been protected. This is why we say: Hands of the NCR!!
Let the NCR be allowed to carry out its mandate without fear or favor! The Treasury and the Reserve Bank must stop interfering with the work of the NCR. We call on the Treasury to strengthen its regulatory hand and stop the reckless lending practices by the banks.
Statement issued by the FSCC and SACP, August 10 2014
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