EFF statement on R60 billion class action lawsuit against big banks
27 September 2024
The Economic Freedom Fighters (EFF) fully endorses the long-overdue R60 billion class action lawsuit against South Africa's major banks for their predatory and exploitative practices, which have left hundreds of poor, primarily black South Africans homeless and destitute. This legal action exposes the deep-rooted systemic neglect and exploitation of the vulnerable, a reality the EFF has consistently highlighted in its fight for economic justice.
This class action involves more than 200 applicants whose homes were repossessed by major banks—Absa, Standard Bank, FirstRand, and Nedbank—after missing bond payments. These repossessed homes were auctioned off for a fraction of their true market value, with some homes sold for as little as 10% of what they were worth, leaving their owners homeless and still indebted to the banks.
Some properties were even sold for as low as RI 00. These practices were common before 2018 when the Gauteng High Court, Pretoria, amended the rules to require reserve prices for properties sold in auction, but by then, many had already been affected. The applicants, most of whom are poor and unable to recover their losses, have been living in destitution for over a decade, and now seek damages from the banks.
This legal battle began in 2017, when the victims sought recourse from the Constitutional Court. However, the court referred the case back to the High Court for further hearings. In 2020, a R60 billion class action lawsuit was filed against the banks in the Gauteng High Court, Johannesburg, for unjustly selling properties far below market value, failing to treat property sales as a last resort, and disregarding the livelihood of the affected homeowners.
The class members argue that the bank's sales in execution were not only unnecessary in many cases but also represented a grave violation of their rights, as these properties were their primary residences and were sold at far below market value, destroying their savings and security.
The EFF has consistently exposed how black homeowners are disproportionately targeted, losing their homes and properties when they encounter financial hardships, while white individuals are given ample time and opportunity to make arrangements without forfeiting their assets. These practices have been confirmed by the fact that recent statistics show that out of six million home loan applications submitted by historically disadvantaged persons, less than half were approved, while white applicants continue to receive loans valued exponentially higher.
African people have been violently stripped of their land for generations by colonialism and apartheid, forced into cramped townships and locations, left without the dignity of space and ownership. Now, even in our pursuit of homeownership, we remain landless, dispossessed twice over by white capitalist banks. When it comes to credit for consumer goods—clothing, cars, and credit cards—white establishments are quick to trap us in endless debt. But when it's about owning a home, they block our path at every turn, denying us the one thing that could truly liberate us from generational poverty. This is an orchestrated system of oppression.
As far back as 2019, the EFF called for a judicial commission of inquiry, with forensic financial expertise, to investigate these discriminatory practices after widespread reports of the deeply entrenched racist practices within the South African banking sector, where Black people are systematically exploited and denied fair access to financial services. Furthermore, we called for banking licenses to be revoked from institutions that continue to discriminate based on race.
It is, therefore, deeply concerning that it took until this year for the Minister of Human Settlements, Mmamoloko Kubayi, to summon the banks to address the shocking statistics regarding their racist practices of denying Africans access to financial services. Even now, the onus falls on individuals to pursue class action lawsuits, highlighting a glaring neglect of effective government oversight and legislative action to protect the marginalised.
The banks have long operated with impunity, shielded from any meaningful oversight due to the ANC's collusion with white capital in South Africa's financial landscape. With the current DA-led coalition, the prospects for genuine accountability have diminished significantly. This partnership perpetuates a system that favours the interests of a privileged few over the needs of the marginalised.
The EFF has long recommended that government needs to provide significant housing finance subsidies for middle-income and low earners, including those earning minimum wage. Additionally, to enforce laws preventing banks from repossessing homes from individuals who have paid off 50% of their bond but are unable to continue payments due to socioeconomic hardships. This is the only way to counter the extreme historical inequalities that exist in our country, and the continued targeted dispossession of Africans.
More importantly, as stated in one of our seven cardinal pillars, we need the establishment of a state bank to break the stranglehold of private financial institutions, particularly when it comes to home loans. A state bank would offer lower interest rates, making it easier for historically dispossessed and working-class people to access affordable home loans and escape the exploitative grip of commercial banks. By prioritising the needs of the people over profit, a state bank would provide fair, accessible credit, and ensure that homeownership is not a privilege for the few, but a right for all South Africans.
The EFF remains clear in its commitment to pursue ajudicial investigation within Parliament, and we will give our political support to this case until every victim receives the justice they rightfully deserve.
Issued by Leigh-Ann Mathys, National Spokesperson, EFF, 27 September 2024
