BANKING LAW & PRACTICES

CASE: 1
The complainant contacted his bank manager and was advised that a payment could be reversed
if a sale turned out to be a scam, since the payment would take 48 hours to transfer. The
complainant paid R300 000.00 for a vehicle on 10 April 2017 and on 11 April 2017 realised that
the transaction was a scam and reported it to the bank. The complainant was advised that the
funds had already been credited into a beneficiary account held at another bank and that all the
funds had been withdrawn. The complainant wanted his R300 000.00 from the bank as he made
the payment based on the advice he received from the bank manager.

The bank advised that it was the complainant’s responsibility to clear the legitimacy of the
beneficiary prior to making the payment and the bank declined the complainant’s request for a
refund.

After consideration of the facts as well as the bank manager’s statement, the OBS found that the
bank manager had failed to exercise reasonable care and skill to prevent the complainant’s loss,
which was reasonably foreseeable. Since the bank manager informed the complainant that the
Business Online payment option takes up to 48 hours for the funds to reflect in the beneficiary
account of an agent bank and that the Business Online payment option was therefore the best
way to effect the payment, the complainant was reasonably justified in his reliance on the advice
he received from the bank manager. The OBS further found that the bank manager should have
clearly informed the complainant that, based on his professional opinion and experience, the
possibility of the funds immediately clearing was more than a likelihood. Instead, the bank
manager provided the complainant with advice that made it appear that the payment could be
recalled if the recall was done within 48 hours, which was clearly incorrect and resulted in the
loss suffered.

The OBS found that the bank was liable to refund the complainant’s loss in full and the bank
agreed.

PRINCIPLE: If the bank misrepresents the complainant and the complainant acts on the
misrepresentation to his detriment, the bank will be held liable for the loss.

Note : Analyze the Case