Banking Association rejects Minister's claim of home loan application discrimination

Banking Association South Africa has refuted a statement by the Human Settlements Minister that implies there may be unfair discrimination in the approval of home loans by banks.

Promoting government's initiative to eliminate race-based criteria in financial institutions' application processes, Minister Mmamoloko Kubayi is calling for greater transparency from the sector.

Accordingly, she wants legislative amendments to the Home Loan and Mortgage Disclosure Act.

This is how the Minister explained it during a Money Show interview a few nights ago:

"What is worrying us is that currently there isn't full disclosure from all the banks, and that's why it becomes difficult to dismiss such (allegations)."

In its responding statement, BASA said that, according to its members, 48% of home loans are declined because of a lack of affordability; 34% because of an adverse credit record and 13% because of unacceptable security.

'The claims are not founded on what has happened', BASA MD Bongiwe Kunene tells Stephen Grootes.

Kunene points out that banks (and all other lenders) must declare and disclose the information about the loans they grant to comply with the National Credit Act.

"That disclosure is within the ambit of the national credit regulator, and that information is available on a quarterly basis."

"When it comes to lending decisions, what is important for the banks, really, is can the borrower afford to repay.... and then the borrower's credit history... so whenever a lending decision is taken, it reflects that there's been due diligence by the banks."

"It never is about the race or ethnicity of the person."

Bongiwe Kunene, MD - Banking Association SA

Questioned about why there cannot be more transparency in line with what the Minister is asking, Kunene refers Grootes to various pieces of legislation she says govern the issue.

"Transparency is always something that banks would advocate for, but the information that any lending institution has has on its clients... is also in the ambit of the information regulator."

"And it's not hiding behind the law, Stephen, it's about banking practices."

Bongiwe Kunene, MD - Banking Association SA

To hear Kunene's detailed explanation, listen to the interview audio at the top of the article