<\/p>\n
You can also listen to this podcast on iono.fm here.<\/p>\n
JEREMY MAGGS: Now, as household budgets come under increasing pressure, more South Africans are falling behind on vehicle repayments. But missing payments does not give a bank the right to simply take or repossess your car. The National Financial Ombud Scheme (NFO) independently resolves complaints between consumers and financial institutions, including disputes involving banks, vehicle finance, repossessions and debt recovery.<\/p>\n
Now, two recent cases show that even where a customer is in arrears, the banks have still got to follow the law. So I want to talk about this in a little more detail, and I\u2019m joined now by Johan Brouwer, who is manager of adjudication in the banking section of the NFO. Johan, welcome to the programme. Let\u2019s get straight to the heart of it then, when can a bank legally take a financed vehicle from a consumer?<\/p>\n
JOHAN BROUWER: Hi, Jeremy, thanks for having me on. I think this is a very important discussion. To answer your question, there are only two instances where a bank can legally retake possession of a vehicle from its customer. One would be by following the formal legal process and obtaining judgment against the customer, authorising them to repossess that vehicle.<\/p>\n
Alternatively, if the customer voluntarily terminates the contract and returns the vehicle to the bank.<\/p>\n
Read\/listen:
Over-indebtedness rises as more people in SA struggle to keep up with repayments
Car repossession and what to do about it<\/p>\n
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JEREMY MAGGS: What should a consumer ask for then if someone arrives at the door saying they are there to collect it? Because, Johan, let\u2019s be honest, if that were to happen to someone immediately, you could be overwhelmed and even intimidated.<\/p>\n
JOHAN BROUWER: I think customers must keep in mind that there are only those two instances when the vehicle can be taken. So if the bank has obtained judgment, then a warrant of execution would need to be issued, and the sheriff of the court would have to come and get that vehicle from the customer. They would first establish, is this the sheriff, get the person to provide proper documentation to show that they are the sheriff of the court, and then show them the judgment and the warrant of execution authorising the sheriff to repossess that vehicle.<\/p>\n
Alternatively, if the bank hasn\u2019t obtained judgment and it\u2019s just a representative or an external debt collection agent that is coming to the customer. Again, make sure you get some sort of proof from that person that they\u2019re acting on behalf of the bank.<\/p>\n
Then you don\u2019t have to give them the vehicle, no matter what that person tells you, if there\u2019s no judgment and no warrant of execution, you don\u2019t have to give the vehicle to that person.<\/p>\n
So I would recommend that if the customer is uncomfortable, that they phone the bank to verify that this person is indeed coming from the bank. If they do want to hand over the vehicle and they don\u2019t feel comfortable, rather arrange with the bank that I will come to your premises or your trade centre and hand over the vehicle there to make sure that I\u2019m actually dealing with the bank and not someone who\u2019s misrepresenting that they are acting on behalf of the bank.<\/p>\n
JEREMY MAGGS: You\u2019re making a very clear distinction, then, between what is voluntary surrender and repossession. That distinction is very important, as you\u2019ve just outlined.<\/p>\n
JOHAN BROUWER: Yes, very important. The one is initiated by the bank. It\u2019s a formal legal process where there is the court involved, a summons, other legal notices needing to have been served. And the other is a voluntary process that\u2019s initiated by the customer if they feel they can\u2019t continue, paying their monthly instalments, they can decide to let the bank know, I rather want to return this vehicle to the bank.<\/p>\n
Read:
Banking ombud sounds alarm on higher car repossession complaints
High court orders Sandton dealership to give customer her money back<\/p>\n
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JEREMY MAGGS: I want to come back to voluntary surrender in just a moment. But is it incumbent on the bank to let the client know about the judgment that has been given? Or can the sheriff simply arrive at the door with the warrant and the judgment?<\/p>\n
JOHAN BROUWER: No. In terms of the National Credit Act, in order for the bank to obtain judgment against a customer, there are a number of steps that they have to follow before doing that. It starts off with a letter of demand sent to the customer, which outlines that the account is in arrears, and giving the customer the options to try and settle the arrears or enter into a payment arrangement, refer the account to debt counselling, or if they\u2019re disputing their arrears, they can refer it to a body such as the NFO to have a look at.<\/p>\n
If the customer doesn\u2019t take those steps within 10 days or a set period in terms of that letter, then the bank must issue a summons.<\/p>\n
That summons will be served on the customer, and the customer will then be given an opportunity to defend that summons. If they don\u2019t defend it, the bank can take a default judgment, but the customer again will be notified of the application by the bank to obtain default judgment against them.<\/p>\n
Then once they\u2019ve obtained that judgment, then yes, they can only then instruct the sheriff to go and collect the vehicle. So there are a number of steps where they need to notify the customer of the action that\u2019s being taken before judgment is obtained.<\/p>\n
JEREMY MAGGS: Now, let me ask you about voluntary surrender. Is it valid if the consumer has not signed something, clearly agreeing to it?<\/p>\n
JOHAN BROUWER: No. The National Credit Act is quite clear, that it must be a written instruction from the customer saying that I\u2019m cancelling the agreement between myself and the bank, and I\u2019m voluntarily returning this vehicle back to the bank. That must be signed by the customer. If that isn\u2019t there, then it isn\u2019t a valid voluntary surrender in terms of the National Credit Act.<\/p>\n
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JEREMY MAGGS: Many people assume once they hand the vehicle back, the debt simply disappears. That is not the case, though, is it?<\/p>\n
JOHAN BROUWER: No, definitely not, Jeremy. Once the vehicle is returned in both instances, either in repossession or voluntary surrender, the bank will then have to have the vehicle valued by a proper valuation company. They\u2019ll notify the customer of the valuation, and then thereafter they will sell it. Normally they sell it at public auction to the highest bidder. If your outstanding balance, at the time that the vehicle is sold, is higher than the amount that the bank obtained for the vehicle at that sale, you\u2019re still going to be liable for that shortfall amount.<\/p>\n
After the vehicle is sold, the bank then informs you this is the amount that the vehicle was sold for, this is the amount that\u2019s still outstanding on your vehicle finance account, and you need to then pay that or make arrangements with the bank to pay that outstanding balance.<\/p>\n
JEREMY MAGGS: So you have very little control, if none at all, over the actual sale price once it\u2019s back in the hands of the bank.<\/p>\n
JOHAN BROUWER: Yeah, not much. There are provisions within the Act, and in terms of the process, you can dispute the valuation if you think the valuation is too low. Alternatively, you can dispute the sales price at auction if you think it was too low. But generally, there\u2019s little control or involvement by the consumer in that process.<\/p>\n
JEREMY MAGGS: Johan Brouwer, thank you very much indeed. You are the manager of adjudication in the banking section of the National Financial Ombud. Some really good advice there. Thank you indeed.<\/p>\n
#Vehicle #repossession #banks #legally<\/p>\n","protected":false},"excerpt":{"rendered":"
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