Parliament scrutinises closure of bank accounts
National Treasury yesterday said it will update Parliament soon on plans to update banking regulations to bring them in line with the State Capture Inquiry's recommendations on the closure of bank accounts.
The issue has sent ripples through the banking industry after the Judicial Commission of Inquiry into State Capture recommended that existing legislation be changed, or that new laws be introduced, to require banks to allow clients to defend themselves before their accounts were shut down.
BusinessLIVE reports that the issue of the closure of bank accounts shot to prominence in 2016 when the accounts of Gupta-owned Oakbay Investments and 13 other linked companies were closed by all the banks.
Badat told Parliament’s Finance Committee that the FSCA was having ongoing engagements with the banking industry to identify potential gaps in the conduct standards, adding that strengthened fairness requirements were planned by Treasury in a forthcoming Conduct of Financial Institutions Bill.
The policy question for Parliament was whether the standards and legislative framework with regard to bank account closures went far enough and whether further legislative intervention was necessary.
The Zondo Commission of Inquiry recommended that the fairness of the process of closing individual bank accounts could be strengthened.
The issue of the closure of bank accounts was raised at the committee meeting by counsel Tiny Seboko representing Gardee Godrich Attorneys, which is acting for five clients whose personal and company bank accounts have been closed in what she said was an ‘arbitrary and unilateral’ manner on the basis of what she claimed was racial discrimination as they are all black.
The BusinessLIVE report notes that the clients who include a state employee in the Eastern Cape, the sole proprietor of a KZN company and political party Democracy in Action have been granted leave to join the application by Iqbal Surve’s Sekunjalo group of companies to the Western Cape Equality Court to contest the closure of its bank accounts.
Article disclaimer: While we have made every effort to ensure the accuracy of this article, it is not intended to provide final legal advice as facts and situations will differ from case to case, and therefore specific legal advice should be sought with a lawyer.
