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One has to speculate on whether there is something behind bringing a small lender such as Ubank to a consumer tribunal for reckless lending when they have done no such thing. Especially during a period where Anglo Platinum is investigating companies for signs of the same behaviour nationally, and the company in question do not feature. Alec and Gugu try to get to the bottom of the Regulators’ behaviour in the CNBC studio today with the Chief Executive of Ubank, Luthando Vutula. Well worth the watch. – CH
GUGULETHU MFUPHI: Welcome back to Power Lunch. South Africa’s Regulator has referred small lender, Ubank, to a consumer tribunal recommending it should be fined for reckless lending, and forced to change its business practices. Ubank’s Chief Executive, Luthando Vutula, joins us now to respond to these allegations, good to have you with us today. Maybe if you have an opening comment, with regards to reckless lending. Is your company involved in such?
LUTHANDO VUTULA: Definitely not. We’re not Gugu, and obviously, I mean it’s a practice that us, as a bank, we do not support and we do not condone, because we value our relationship with our customers and I think what is very important is that banking itself is a relationship and a trust relationship between a bank and the customer. Obviously, this is definitely not something that we agree to, and in fact, we have informed the regulator that we do not agree with their report.
ALEC HOGG: What did they say?
LUTHANDO VUTULA: Well, they are alleging that we have recklessly lended and essentially I think there the act is very clear. In terms of Section 80 in terms of what IS reckless lending. We have said to them, we’ve proven to them that that is not what we are doing and it is not something…
ALEC HOGG: But what did they say? What, exactly are you supposed to have done or alleged to have done?
LUTHANDO VUTULA: Well, the Act is clear that when somebody comes and borrows money from you, you need to do an affordability test. We do that. That is part of our practice. We need to make sure that that person, when they borrow money, they can afford to repay it. I mean, we’ve been in this business and I can assure you that our book is one of the best performing, unsecured books in the industry, so we were really taken by surprise. In fact, we did not understand why the Regulator went public on this matter, before we could even discuss it at the Tribunal. We still don’t understand why that is the case, because…
ALEC HOGG: Have you phoned them? Have you spoken to them? Have you gotten in your car and driven over there, to go and talk?
LUTHANDO VUTULA: Unfortunately, you know Alec, is we have been discussing this matter since October last year. It is unfortunate that the Regulator has consistently refused or ignored our pleas to meet with them and actually have a constructive engagement, because we do believe that this matter in fact, would not have even have gone that far, had we sat around the table. They took a sample from two of our branches, and we have no problem with that, and they came up with the finding. We are saying to them, “This is in fact the truth,” but they’ve just ignored that.
GUGULETHU MFUPHI: Tell us about that sample because the majority of your operations are in mining areas.
LUTHANDO VUTULA: Absolutely, we are in mining. We are a mining bank and we remain the bank of choice for mineworkers, their families, and communities. For us, really, this does not go well with our relationship with our communities, and you understand, mining has gone through a tough time. In 2012, we had Marikana. In 2014, we had the platinum strike. We managed, I think, as a bank together with our customers to walk that journey with them and, as a result, we are still now, today, restricted 80 percent/90 percent in fact, of the mineworkers that were involved in the platinum strike. They are paying us now very well, and news like this, certainly, I think from our side, would discourage them.
ALEC HOGG: Anglo Platinum has said that it is going to take on anyone who’s been lending recklessly to its employees. Have you had any discussions with them? In other words, are you in their ‘crosshairs’?
LUTHANDO VUTULA: Well look, first of all we support that. If that is what they want to do it is the correct thing to do, because nobody should be lending recklessly, and that is why I say, this is absolutely unfortunate, that the Regulator decided to go public, on a matter that is still being referred to the Tribunal.
ALEC HOGG: Yes, but my question is has Anglo Platinum been in touch with you?
LUTHANDO VUTULA: No, they have not.
ALEC HOGG: They haven’t, so you’re not part of their investigation?
LUTHANDO VUTULA: No, absolutely not.
ALEC HOGG: So why would the Regulator not be going for the same people that Anglo Platinum [JSE:AGL] is going for, rather than a more formal operation, like yours?
LUTHANDO VUTULA: Well, I honestly don’t know and we don’t know what triggered the investigation but we’re not concerned about that.
ALEC HOGG: Do you have any suspicions?
LUTHANDO VUTULA: Well, no. One can just speculate. Look, the reality is that the last 12 months have been difficult, I think, for anybody who’s been in unsecured lending, including the Regulator. There’s been a lot of criticism, and I really don’t know but I would not want to speculate and say it’s wanting to deal with credibility issues on the Regulator.
ALEC HOGG: But this is crazy. You are sitting here telling us that the Regulator, which is a public body, is investigating you and accusing you of doing reckless lending. You say ‘but we’ve never done reckless lending. We are not reckless lenders’.
LUTHANDO VUTULA: Absolutely.
ALEC HOGG: How can we have a State organisation accusing you of it, and then you…I ask you, “What’s behind it,” and you say, “I don’t know.” You must have some thought. You must have investigated. You’ve guys have got a team of people there, digging over. This is life threatening to you.
LUTHANDO VUTULA: No, look. Absolutely, and that is why we are taking this thing very seriously. Even the very day we got the letter from the Regulator, making these allegations, we immediately went back to them. In fact, the time they came to us and they said they wanted to investigate. We’ve cooperated 500% with them. We gave them the information. They gave us the findings and we said ‘we don’t agree. Let’s sit around the table’. Now, we honestly don’t know what prompted, I think, the investigation but to us that’s not important because we do believe we are responsible and that’s the most important thing for us. That’s why if there are companies like Anglo, who are saying we don’t want people taking advantage of our employees, we support them, unconditionally’.
ALEC HOGG: Yes, and they’re not attacking you.
LUTHANDO VUTULA: Yes.
ALEC HOGG: The point here is are you going to sue the Regulator? If someone labels me, I will sue them because that is my good name. Similarly, with you, you’re a bank. It’s your reputation.
LUTHANDO VUTULA: Look, absolutely and that is why… Look the first thing that I must, well something else that I must say, we do understand the role of the Regulator. It’s an important role. They have to regulate this industry and we support that, but in this instance, they are wrong.
GUGULETHU MFUPHI: So what happens now?
ALEC HOGG: Are you going to sue them?
LUTHANDO VUTULA: Well, now we are going to the Tribunal. We will have to file our answering Affidavit, by the 30th of this month, and we are going to do that, and then this matter will be decided at the Tribunal.
ALEC HOGG: But the damage has been done to your reputation.
LUTHANDO VUTULA: Unfortunately, and that is why we feel that it is really unfortunate and it was not necessary. I’m still wanting to understand why they decided to go this route.
ALEC HOGG: I’m going to take you back, maybe ten years ago.
LUTHANDO VUTULA: Yes.
ALEC HOGG: At the World Economic Forum in Africa, in Cape Town. Trevor Manual stood up and he said ‘businessmen are cowards. They just take it. They don’t fight back’. I’m suggesting to you that, in this instance, your reputation, which is all that a bank has…
LUTHANDO VUTULA: Absolutely.
ALEC HOGG: Is on the line here. It is fine that you are here and you say ‘I’m innocent’ but surely this is irresponsible behaviour, reckless behaviour. If you are accurate, if you are correct, by the regulator, why don’t you do something about it?
GUGULETHU MFUPHI: Are you going to do something about it?
LUTHANDO VUTULA: Yes, we are going to do that, and we will definitely, as we said, we do want to engage with the Regulator on this thing and understand where they are coming from because we believe it’s wrong and, Alec, you are absolutely correct. The damage that this has done to our reputation and more importantly to the relationship that we have with our customer, it’s immeasurable.
ALEC HOGG: Exactly.
LUTHANDO VUTULA: And to the industry, for that matter, and I think unsecured lending plays a critical role in this sector. People take their children to school, they build houses, and they feed their families, so it’s really something absolutely unfortunate.
ALEC HOGG: We look forward to seeing the developments in this case.
GUGULETHU MFUPHI: Exactly. Thank you so much for your time today. That was Ubank’s chief executive, Luthando Vutula.
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16 Jan 2015
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