How to avoid ending up with an inflated loan

If you, or someone you know is illiterate go with them to the bank, then get the consultant to read out the contract to you. File photo.

If you, or someone you know is illiterate go with them to the bank, then get the consultant to read out the contract to you. File photo.

Published Jun 15, 2024


By: Nicola Mawson

An FNB branch consultant, who ripped people off out of more than R200 000 over a period of five months, has suffered the consequences by being barred from legally acting as a Financial Services Provider.

Derusha Govender, who was employed by FNB as a branch consultant, took umbrage at the decision to bar her from selling more financial products.

She approached the Financial Services Tribunal to have it overturned, arguing that the bank didn’t act in a way that was fair – even though she never disputed the fact that she had committed numerous acts of “dishonesty”.

This information is contained in a court ruling, stating that in a bid to increase her commission -- which she earned over and above her salary by upselling products -- Govender signed clients up for thousands more in loans than they had asked for.

In one situation, she added R50 000 to a loan request of R1 000 when an illiterate client applied for the loan.

Govender committed this scam at least five times, signing those clients up for more than R200 000 in loan amounts that they didn’t ask for.

Her modus operandi was to put the loan through and then put the excess amount back into either their loan or revolving credit accounts.

The net result was that Govender earned commission on the inflated amounts as well as prejudicing the clients because they ended up paying more in initiation fees as well as instalment payments.

Following a process to disbar Govender, FNB stated: “You acted dishonestly when you manipulated your sales achieved during the period November 2021-March 2022, by inflating the loan amounts for customers for the purposes of earning higher EV (embedded value)… ”

Govender, who was a representative in terms of the Financial Advisory and Intermediary Services (FAIS) Act, had already resigned and was working out her leave when FNB placed her on precautionary suspension before terminating her contract.

She turned to the Financial Services Tribunal, representing herself, to argue that being debarred was inappropriate because she wasn’t found guilty of any offence during her time at FNB. She also contended that FNB’s decision to debar her was procedurally unfair, and "not justified in the context of the charges levelled against her”.

What Govender took particular umbrage with was the unfair process, as it was only on August 30, 2023, that the “FAIS panel found the applicant no longer fit and proper, and she did not possess honesty and integrity as required by the FAIS Act”, the judgment by the Tribunal reads.

Before asking that Govender be disbarred, FNB held a hearing at which she was present and was found guilty.

This was followed by a process at FAIS, at which Govender had the opportunity to challenge the charges against her. In the end, the Tribunal found the process to exile Govender was fair.

Personal Finance tried unsuccessfully to locate Govender for comment.

Meanwhile, FNB’s Executive of Corporate Affairs, Jacqui O’Sullivan, said the bank has strict policies governing employee conduct, along with extensive measures to identify any unauthorised actions by employees.

“The matter in question was thoroughly investigated and appropriate actions were taken against the former employee in line with FNB’s internal policies and applicable legislation.

“Our customers expect and deserve the highest quality service. The bank has a zero-tolerance approach to unauthorised activities on customers’ accounts,” she said.

O’Sullivan said Govender had breached FNB’s code of conduct, values and acted outside the customers’ mandate. “Considering the serious nature of the misconduct, the bank acted swiftly to address the issue, ensuring compliance with relevant legislation, while also prioritising and protecting its customers.”

FNB took the steps needed to safeguard customers and uphold its integrity. “This case exemplifies the bank’s commitment to maintaining high standards of conduct by its employees and this serves as a deterrent to curb any possible recurrence.”

Personal Finance’s tips on how to avoid ending up with an inflated loan:

Preferably, don’t sign up for a project or service over the phone because this lack of physical one-on-one interaction means that the process is often rushed, and it’s less likely that you will understand all the terms and conditions. If you do enter into an agreement this way, ask for the recording right away and keep it in a safe place, with a backup.

  • If you, or someone you know is illiterate go with them to the bank, then get the consultant to read out the contract to you.
  • If the contract is not in your first language, make certain that the bank affords you the service of a translator.
  • The Consumer Protection Act stipulates that contracts should be in plain and simple language, so you need to be able to understand it completely. Don’t be embarrassed to ask more questions; as the adage goes, there is no such thing as a stupid question. In fact, the Act stipulates: “Plain language is language that enables an ordinary consumer (of the class of persons for whom a notice, document or visual representation is intended), with average literacy skills and minimal experience as a consumer of the relevant goods or services, to understand the content, significance and import of a document, notice or visual representation, without undue effort.”
  • Check your statements carefully each month, and also keep an eye on your transaction notifications from the bank – as soon as you see something that doesn’t look right, pick up the phone

If something isn’t resolved to your satisfaction, escalate it immediately, both through various social media options and by taking it straight to the bank.