The fight between the banks and the socalled interest checking companies is heating up with claims and counter-claims coming under the scrutiny of the parliamentary finance committee this week.
Members of Parliament, who criticised both the banks and the interest checkers, agreed to ask the Harmful Business Practices Committee of the Department of Trade and Industry or the Registrar of Banks to investigate.
Interest checking companies do recalculations on your bank accounts, such as your home loan or overdraft account, to see if you have been overcharged. For this they charge an upfront fee of about R1 600 as well as a percentage of the amount that is reclaimed, if there is a mistake. Some refund the initial charge if no mistakes are found.
The latest salvo in the battle between the two parties is the claim by the interest checkers that banks are charging "exorbitant" and "illegal" fees for making information on customers accounts available to them.
But the Council of South African Banks (Cosab) says some of the interest checkers are "scam" operators.
Stuart Grobler, general manager of Cosab, says the interest checkers rip their clients off with dubious marketing tactics, incorrect interpretations of the law or judgments and false claims.
An example of interest checkers incorrectly interpreting the law is a section under the Usury Act which limits the amount that banks can charge for information on accounts to R5.
Grobler says a typical scenario is where a salesman from an interest checking company convinces a client to have a recalculation done on his or her cheque account for the past ten years.
This means every transaction must be replicated can you honestly expect a bank to provide 10 years worth of historical information for R5?
If you want to query your account with bank, without the intervention of a recalculator, the bank will usually assist you at no charge, says Grobler.
Legitimate companies such as auditing and accounting firms check company financial statements regularly, he says.
Grobler admits that banks have paid interest claims on cheque accounts prior to 1992, but there have been very few, if any, claims paid out after 1992.
"Up to that stage, interest rates on overdrafts, were not clearly communicated to clients, and disputes between banks and clients were difficult to resolve, despite all overdraft agreements and practices clearly specifying that interest rates applicable are at the discretion of the bank."
Since 1992, your interest rate is printed on your bank statement and disputes over interest rates cannot occur, says Grobler.
If the bank has made a clear error such as printing your interest rate as "prime + 13" instead of "prime + three", this will be corrected.
Regarding whether banks overcharge their clients or not, Grobler says the banks' computerised interest programmes comply with all the various laws, are audited by reputable external auditors, and do not provide for different routines for big corporate clients or small individual accounts.
Clients are also informed of all interest rates and charges and these are communicated to them regularly.
In parliament this week chairman of the finance committee Sipho Mpahlwa says he received several complaints, dating back to 1995 about banks overcharging their clients by not sticking to the correct interest rates.
ANC member Theo Alant says in 1991 there were many complaints relating to overcharging interest on accounts, before the banks started printing the charges and interest rates on the monthly statements.
Prior to that interest rates were increased without the client being informed, he says.
"The allegation made of fraudulent interest charges is without substance. I think by and large that this is something of the past," he says.
Ken Andrew, from the Democratic Party says there is still a certain amount of unease about the matter. Whether the claims of overcharging were unfounded or not, was not for the committee to prejudge.