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Nedbank admits R1.6bn R699 car scheme exposure

By Staff Writer
Exclusive by Ashleigh Brown, journalist, Justmoney
 
Justmoney has just learned that the Motor Finance Corporation, Nedbank’s vehicle loans division, has a collective outstanding exposure of R1.6 billion to the R699 car deal scheme, almost double Absa’s exposure. In a statement to Justmoney Nedbank claimed “individual MFC clients who have purchased vehicles through the Satinsky Group since 2007 amount to approximately 14 000, with a collective outstanding exposure of R1,6 billion at 30 June 2014.”
 
Nedbank insisted it had done adequate affordability assessments, explaining: “While MFC Nedbank was not privy to or involved with these agreements between client and Satinsky, MFC assessed the client’s application for finance based on the full vehicle value, instalment amount and affordability, within the responsible lending framework of the National Credit Act. At no stage was any form of dealership rebate, subsidy or lead fee factored into MFC’s financing decision.”
 
At the time of writing Standard Bank had still not revealed how many of its clients borrowed through the R699 scheme, and what the bank’s exposure to the deals is. When questioned they referred Justmoney to a previous statement they released which stated: “Standard Bank is not at liberty to disclose those numbers at this time. However, what we can say is that Standard Bank’s exposure is not a large percentage of the total number of vehicles financed through Satinsky.”
 
However, a report by Business Day Live claims that Nedbank and Standard Bank provided the bulk of the remaining loans and that their vehicle-finance units could be owed more than R2-billion. With Nedbank’s revelation, that figure could be even more. 
 
Absa’s involvement 
 
Absa was the first bank to admit its exposure to the failed R699 car scheme. “Absa is currently investigating the Satinsky Car Loan scheme and these investigations are ongoing and have not been concluded. However, our absolute priority is our customers and when we fall short we will work hard to put it right, taking action quickly and decisively,” said Arrie Rautenbach, head of Absa Retail Banking.
 
“The vast majority of customers we have contacted are confident in their ability to meet their repayments. However, where a customer is in difficulty Absa is restructuring the customer’s loan terms to ensure that repayments are affordable,” said Rautenbach. 
 
Absa confirmed it had financed 6,511 Satinsky deals, reported Business Day Live. 
 
Court procedures 
 
This Thursday (7 August) the Eastern Cape High Court is set to rule on whether it will give the green light for the R699 scheme clients to instigate a class action suit against the banks and the Satinsky Group. 
 
Duncan Heuer, the lawyer representing a group of hundreds of disgruntled Satinsky consumers, is looking to declare the contracts null and void in a class action suit against the banks. 
If the class action suit is granted, it will be the second one taking place in South Africa at the moment, after the Transnet pensioner case. 
 
R699 scheme options 
 
There were two payment options motorists had with the R699 car scheme. One of the options had the customers pay the full instalments of the car for six years to a bank. 
 
The other was a contract with a promotions company called Blue Lakes Trading and Promotions, which was based in Hong Kong.
 
Blue Lakes would pay clients a monthly promotional fee if they placed advertising on their cars. It was claimed that if clients opted for a cheaper car and drove more than 2,000 kilometers a month, with the advertising, they would end up paying R699 in instalments back to the bank.
 
Justmoney’s sister website, Moneybags, has a full report on the scheme. 
 
The Facebook group “I have been done in by the ‘Drive a New Car From R699 per month’” currently has 3600 members, all trying to gain support for their cause. 
 
What can you do?
 
While customers of the R699 car deal wait for the green light to instigate a class action suit against the banks and Satinsky Group several have wondered what they should do about their vehicle finance loan obligations in the interim. Some have said that they intend to stop paying their loans until they are more certain about whether there will be a case for a class action suit.
 
However Ian Wason, CEO of DebtBusters, told Moneybags that it’s not wise to stop payments to the bank as they can take legal action against clients who don’t pay. Wason advised that if clients were having problems repaying loans, that they should get in touch with their bank to work out a better payment option or seek the advice of a debt counsellor. 
 
Absa, for instance, has established a helpline to help customers who may be facing financial difficulties. Absa said it encourages any client to contact them on 0860 789 111 as soon as they feel they may have difficulties maintaining payments.

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