1. 2 Billion Rand Adm Fee Scandal



The Beginning:-


In the later part of 2010, Emerald van Zyl discovered that Standard Bank was overcharging mortgage loans registered prior to the promulgation of the National Credit Act in June 2007 on monthly administration fee. SB increased the permitted adm fee of R 5.70 (VAT included) which was against the directives of the Usury Act.


A short summary of the history of the monthly admin fee:-


          In 1999 the Usury Act, Act 73 of 1968 was amended to allow banks to

          recover a monthly administration fee of  R5,00 (VAT excluded).

          The purpose of this fee was inorder to prevent discrimination with

          interest rates against smaller loans in the primarily black low cost

          housing sector. The Act determined that there must be a written

           agreementto charged this fee and also the amount of the fee.

           On 1 June 2007 the National Credit Act was promulgated

           and the Administration Fee of R 5 (VAT excluded) was

           increased to R 50 (Vat excluded ) and renamed “Service

           Fee”. The directives of the National Credit Act also determine

           as the Usury Act that there must be a written agreement in place to

           recover this fee.


Referred to National Credit Regulator:


Four cases with excessive administration fees were referred to the National Credit Regulator by Van Zyl.



The outcome:


On 29 November 2012 the South African : Supreme Court o11f Appeal ruled as follows in the matter between the National Credit Regulator (Appellant)  v Standard Bank of S.A. Ltd (Respondent) (Case No 231/12):-


“It is declared that the respondent is not entitled to charge an administration fee on housing loans that existed at the time the National Credit Act 34 of 2005 came into operation in excess of the fee provided for in paragraph 3(b)(i) of the schedule to the Usury Act, Act 73 of 1968 unless and until       that fee is amended under the powers conferred by s105(1)  of the National Credit Act.



The promise:-



  In mid January 2013 Standard Bank said in a press release that all

  prejudice clients were refunded on 5 January 2013.


And the truth:-


 It now transpired from more than 150 client’s statements Van Zyl   investigated, that these payments were conducted on

 5 January2013 by means of a credit entry on the mortgage.




Only 50% of all prejudice clients were refunded and the amounts that were refunded only represent 45% of the correct amount due at that point in





The next month after the refund Standard Bank continued  levying this illegal monthly administration fee, blatantly ignoring the Appeal Court judgment and the directives of the Usury Act.


The cover-up:-


                       Whenever a client requested Standard Bank to extend the term

                       of the loan or to re schedule payments, Standard Bank is of

                       opinion that there was a “material change” to the agreement and

                       that loan is now regulated by the National Credit Act and on

                       that basis refuted the refund, notwithstanding the directives of

                       the Usury Act and supported by the judgement in the Appeal

                       Court that any change in the amount of administration fee must

                       be agreed upon in a written agreement  





               Those claims Standard Bank refused to refund excessive monthly

               administration fees, Van Zyl now refer these cases to the SAPS for

               criminal charges against the CEO and to the National Credit

               Regulator. This works, as Standard Bank do not want any criminal

               prosecution and clients get refunded.


Total amount due:-


               The claims on mortgage loans on excessive monthly administration

               fees are in excess of R 10 000 and it is estimated that the total

               amount due to clients is in excess of R 2 billion




B) Increasing the interest rates of mortgage loans in arrears:


      The Usury Act and the National Credit Act states that a single rate must

      be agreed upon for the term of the mortgage loan. This is written into

      Agreements of Standard Bank mortgage loans.


      It is an internal policy of Standard Bank to increase the interest rates

      when an account goes into arrears. This is illegal. Under the directives of

       the Usury Act this is a criminal offence.


       the effect:-


                        The last 6 mortgage investigated by Emerald van Zyl for this

                         prohibited conduct, the overcharges were R 96 000,

                         R 134 000,  R 149 000, R 234 000, R 288 000 and R 838 000


                         The client who was overcharged by R 288 000 was settled by

                         Standard Bank last week. 8 execution sales were stayed the

                          last 8 months because of this prohibited conduct


C) Standard Bank applied a fixed interest rate:-


In 2 cases Van Zyl investigated, Standard Bank applied a fix interest rate for 18 months at an interest rate of approximately 6 % higher than the agreed rate. In both these cases the clients were not aware of such a “Fixed Rate” agreement. On request Standard Bank could not produce any documentation for such an agreements. The overcharges on these two accounts are

                        R 88 00, and R 320 000.


Kindly note that this is Van Zyl’s findings  on 150 mortgage loans he investigated. It is therefor advisable to all standard bank mortgage clients to have their Standard Bank mortgage account investigated.


Emerald can be contacted at 082 291 1333 or by e mail at This email address is being protected from spambots. You need JavaScript enabled to view it. .zor This email address is being protected from spambots. You need JavaScript enabled to view it.