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IOL News
26-05-2025
- Business
- IOL News
Editor's Note: Cabinet must reform the COFI Bill to protect the right to bank
According to the current regulatory frameworks, banks are obliged to notify customers and provide them with the opportunity to make representations before terminating their accounts. The Conduct of Financial Institutions (COFI) Bill, soon to be submitted to Cabinet, is a critical opportunity to address arbitrary bank account closures in South Africa. These closures threaten economic stability, undermine fairness, and grant banks unchecked power to act as de facto regulators of public and private life. However, the Bill in its current form fails to adequately protect the right to bank. I urge parliamentarians to scrutinise this legislation and demand reforms that enshrine procedural fairness, as recommended by the Zondo Commission and grounded in the audi alteram partem principle. Cabinet must address these shortcomings by ensuring the COFI Bill incorporates robust protections, including the right to a fair hearing, as recommended by the Zondo Commission and supported by the audi alteram partem principle. The audi alteram partem rule, a cornerstone of natural justice, mandates that individuals be given an opportunity to respond to allegations before decisions are made against them. In the context of bank account closures, this principle is critical. Banks currently rely on the Code of Banking Practice, which only requires "sufficient notice" before termination. This vague standard fails to ensure procedural fairness, particularly for public figures, large-scale employers, or influential stakeholders whose account closures can have far-reaching consequences The Problem: Arbitrary Account Closures South Africa's banking regulatory framework, including the Code of Banking Practice, allows banks to terminate accounts with minimal oversight. Banks often cite vague reasons like "reputational risk," a term so broad it invites abuse. This practice has far-reaching consequences, particularly for public figures, employers, or influential stakeholders whose closures can disrupt businesses and livelihoods. For example, Independent Media recently faced account closure threats based on flimsy reputational risk claims, while Nedbank, implicated in corruption by the Zondo Commission, faced no similar scrutiny. Such inconsistencies highlight the need for reform. As I've previously written, public outcry over these closures reflects growing frustration with banks' disproportionate power. I have written extensively on the subject: Public outcry over bank account closures due to unfounded 'reputational risk' Reputational risk is a red herring and violates my rights - Dr Survé Dr Survé welcomes FSCA's taking banks to task over bank account closures on basis of reputational risk Legal Context: A Flawed The case of Bredenkamp v Standard Bank (2010) illustrates the dangers of the current framework. The Supreme Court of Appeal upheld Standard Bank's right to unilaterally terminate John Bredenkamp's accounts based on reputational risk, setting a precedent that allows banks to act with minimal accountability. While Bredenkamp's alleged illicit activities raised legitimate concerns, the ruling failed to establish a clear process for customers to contest closures. This precedent empowers banks to target parliamentarians, ministers, lawyers, businesspeople, and academics without due process, effectively allowing financial institutions to influence governance and economic activity. Such power is antithetical to a democratic society and risks undermining public trust in both the banking sector and the state. The Zondo Commission said there was a need for stronger protections against arbitrary closures, warning that banks should not wield unchecked power. Internationally, jurisdictions like the UK have taken steps to curb such practices, prohibiting banks from closing accounts based on customers' political views. The US Senate Banking Committee is also moving to eliminate reputational risk as a basis for banking decisions. South Africa must follow suit. The COFI Bill, designed to shift South Africa's financial regulatory framework toward a principles-based, outcome-driven model, is an opportunity to address these issues. However, in its current form, the Bill falls short. The Financial Sector Conduct Authority (FSCA) and National Treasury, through Commissioner Unathi Kamlana and Ismail Momoniat respectively, have acknowledged the need for legislative reform to curb arbitrary closures. The COFI Bill: An Opportunity for Reform The COFI Bill does not mandate a fair hearing for customers, nor does it impose stricter guidelines on banks beyond the existing Conduct Standard for Banks (2020). This standard vaguely requires a "fair process" for account terminations but explicitly avoids prescribing a hearing in cases involving suspected money laundering or terror financing, citing potential conflicts with other laws. While these exceptions are valid, they should not justify blanket exemptions that allow banks to bypass fairness in other cases. Customers, especially those whose closures impact public interest - such as employers or influential figures - must have the right to challenge terminations in court. Without this safeguard, banks can arbitrarily disrupt businesses, livelihoods, and even political processes by targeting accounts without transparent justification. Recommendations for Cabinet To protect the right to bank, Cabinet must demand the following amendments to the COFI Bill: Enshrine the audi alteram partem principle: Require banks to provide customers with a fair hearing before closing accounts, ensuring procedural fairness. Limit vague justifications: Prohibit banks from using "reputational risk" as a catch-all excuse for terminations, mandating specific, evidence-based reasons. Ensure judicial recourse: Grant customers, especially those whose closures impact public interest, the right to challenge terminations in court. Align with Zondo Commission recommendations: Incorporate the Commission's call for stronger protections to prevent banks from wielding unchecked power. It is important that Cabinet demand amendments that align the Bill with the Zondo Commission's recommendations and the principles of fairness. By failing to act, Cabinet risks allowing banks to continue wielding unchecked power, undermining South Africa's economic and democratic fabric. BUSINESS REPORT
IOL News
19-05-2025
- Business
- IOL News
FSCA moves forward with COFI Bill as concerns mount over bank account terminations
According to the current regulatory frameworks, banks are obliged to notify customers and provide them with the opportunity to make representations before terminating their accounts. Image: Independent Media / Ron AI The Financial Sector Conduct Authority (FSCA) has confirmed that it is moving forward with the Conduct of Financial Institutions (COFI) Bill, which aims to provide a fair process for bank account closures. Following a series of delays that initially pushed the tabling of the Bill in Parliament to January, the FSCA announced on Monday that it is now set to submit the Bill to Cabinet for approval soon. In response to a list of questions from Business Report, the FSCA said the Bill adopts a principle-based approach, in other words, it contains high-level principles that financial institutions must adhere to, to ensure the desired outcomes in the financial sector. 'However, it reinforces and extends the principles of fairness for termination of financial products and services already contained in the Conduct Standard for Banks (2020). The Conduct Standard deals explicitly with bank account terminations, i.e. financial customers must have access to a fair process when products and services are terminated (this includes account closures),' said the FSCA. 'It falls short of explicitly prescribing a fair hearing, for various reasons, including that this would not be appropriate where there is suspicion of money laundering, terror financing and other criminal activity, and may actually conflict with other legislation that requires no notice.' Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ According to the current regulatory frameworks, banks are obliged to notify customers and provide them with the opportunity to make representations before terminating their accounts. In South Africa, the Supreme Court of Appeal in Bredenkamp v Standard Bank set the standard for the unilateral termination of the bank-customer relationship on the grounds of reputational risks. John Bredenkamp was a Zimbabwean-based business tycoon suspected of being involved in illicit business activities including tobacco trading, arms trafficking, oil distribution, and diamond extraction. The judgement sets out several principles South African banks have relied on when terminating relationships with their customers. According to the FSCA, the relevant provisions dealing with bank account closures in the Bill are contained in the Conduct Standard for Banks, published under the Financial Sector Regulation Act, 2017. The Conduct provides that banks must conduct their business in a manner that prioritises the fair treatment of their customers; adopt and implement processes and procedures relating to the withdrawal or termination of a financial product or financial service, including closure of a bank account. It also makes provision for reasonable notice of the intention to withdraw or terminate a financial product or financial service, including closure of a bank account by providing reasons for the proposed withdrawal, termination or closure, unless certain circumstances prevail. 'The Conduct Standard furthermore provides that contractual agreements with financial customers must make provisions for circumstances in which the contractual agreement may be terminated or withdrawn by the bank,' said the FSCA. 'This implies that the closure, termination or withdrawal of a financial product must be done as part of an agreed process enforcing contractual obligations and remediating breaches. The circumstances in which terminations may occur must be disclosed to the customer in the contract. 'Both the existing Conduct Standard and the proposed COFI Bill require a fair process for account closures. What constitutes 'fair' and whether this includes the right to be heard will depend on various circumstances that may not be best resolved through further regulatory amendments. 'Instead the FSCA is engaging with the sector to determine a more appropriate way of ensuring consistent understanding and application of 'fairness' based on various scenarios. This will be based on a review conducted by the FSCA of the sector's practices in this regard.' In 2022, lawmakers have hauled the FSCA over the coals about the lax manner in which they were treating the unilateral and arbitrary closure of bank accounts. In his final State Capture report, Chief Justice Raymond Zondo recommended that relevant existing legislation governing banks be amended to introduce a requirement of fairness or, if warranted, a new piece of legislation to be enacted to compel the banks to afford the client a proper opportunity to be heard before their accounts were closed. Visit:
CBS News
08-04-2025
- General
- CBS News
Horse-drawn caissons to return to Arlington Memorial Cemetery after 2-year pause
Arlington National Cemetery will soon bring back caisson horses for some military funerals after implementing a nearly two-year pause to improve the herd's health, the Army announced Tuesday. Horses have for decades performed the solemn duty of pulling the caisson holding the casket of fallen service members, but the Army put a hold on that element of the funerals in May 2023 after an investigation into the death of two horses exposed unsatisfactory living conditions for the herd. After making major changes to the horses' working and living conditions, the Army plans to reintroduce limited use of caisson horses during military funerals starting the week of June 2. Initially, the funerals eligible for caisson escorts will include service members killed in action, recipients of the Medal of Honor or the Prisoner of War Medal, as well as senior noncommissioned officers, senior warrant officers and senior commissioned officers. Acting superintendent of Arlington National Cemetery Renea Yates said in a statement that while the limited integration may be "disappointing to some families, this decision allows us to reintegrate our working horses back to the cemetery and safely continue the sacred duty of escorting our nation's heroes to their final resting place." Starting in June, two squads of 11 horses will perform two services a day for a total of about 10 funerals per week. Before the pause, the horses appeared in about 30 services every week. A third squad is finishing up its training, but the cemetery still won't be able to undertake more than 10 funerals a week with the horses until a fourth squad completes its training. Eventually, the Army aims to provide seven squads of horses if it can build suitable stables for that many. The caisson horses in service before the pause have been rehabilitated and retired, and since then, the Army has procured 46 horses. The Army is slowing the reintegration to ensure the program does not suffer the same problems that led to the pause. During that period, the Army revamped the program to change the procurement of horses, training, facilities and equipment after consulting with experts in the equine industry. CBS News reported in October 2023 some of the changes the Army was considering. For instance, the Army has reduced the weight of the caisson, or artillery wagon, from 2,600 pounds to 1,400 pounds to ease some of the strain on the horses and changed the formation of the squad from six horses to 11, so there are back-up horses available, if needed. The budget for the military working horses has increased about tenfold since the pause, according to Maj. Gen. Trevor J. Bredenkamp, the commanding general of Joint Task-Force National Capital Region and the U.S. Army Military District of Washington. Bredenkamp also told reporters Tuesday the Army has about $10 million this year for the program. The total spent for each squad of 11 horses, according to Bredenkamp, is $900,000, after adding the costs for procurement, training, equipment and facilities. "Everybody realizes that if we underfund this moving forward, we're going to go back to the same problems we had in the past," Bredenkamp said. While two squads have completed their training, they have not practiced on the hills of Arlington National Cemetery. Visitors to the cemetery can expect to start seeing the horses on the grounds this month.
Washington Post
08-04-2025
- General
- Washington Post
Army to resume horse-drawn caissons for funerals at Arlington Cemetery
The Army said Tuesday that it was partially resuming its horse-drawn caisson program for funerals in Arlington National Cemetery, three years after an investigation found that neglectful treatment of horses had contributed to a spate of equine deaths. Maj. Gen. Trevor J. Bredenkamp said the resumption comes after a complete overhaul of the program, in which certain deceased service members are conveyed to their graves in horse-drawn artillery wagons, or caissons. Funding was boosted, Bredenkamp said. Soldier horsemanship training was revised. Custom-made saddles were acquired for the horses. And the weight of the old caissons was reduced. 'We had to basically reinvent the way we were doing these things,' Bredenkamp, commanding general of Joint Task-Force National Capital Region and the U.S. Army Military District of Washington, said in a phone news briefing. The caisson service, long a fixture at the historic cemetery just outside Washington, was suspended in 2023, stemming from the earlier deaths of four Army horses and reports of poor conditions in the Army stables and inexperienced staff. The solemn tradition of bearing the dead on a caisson is tied to the battlefield role of the wagons as they delivered supplies to the front lines and returned with dead and wounded soldiers, according to the Military District of Washington website. Horse-drawn caissons are often used during state funerals, such as the rites for President Jimmy Carter in January. His casket was carried up Capitol Hill by the first of the new caisson units the Army is training, Bredenkamp said. Perhaps the most memorable use of the horse-drawn caisson was during the 1963 funeral of President John F. Kennedy, which was watched by millions of people on television. The cemetery caisson service will resume on a limited basis starting the week of June 2, but horse teams and personnel will start getting used to moving through the cemetery later this month, the Army said in a statement. The service will increase as the Army acquires more horses and trains more soldiers for the program. Problems with the caisson unit first came into public view in 2022, when an Army investigation found the horses' living conditions in stables neglectful, contributing to four equine deaths. A later report put the horse death toll at 11 over an eight-year period. Other reports found horses bore scars from ill-fitted tack, too tight for their bodies. The investigation determined that the overworked horses lived in cramped stalls and paddocks, and were given contaminated feed. A necropsy of one horse found 44 pounds of gravel in its gut, a result of unsanitary living conditions. After a year of physical rehabilitation efforts for the roughly five dozen horses the investigation centered on, all were quietly retired, too old and too broken to continue working. Not all funerals in Arlington get a caisson. In general, those eligible include service members killed in action, recipients of the Medal of Honor or the Prisoner of War Medal, senior noncommissioned officers, senior warrant officers and senior commissioned officers, the Army said. Bredenkamp said funding for the program went from about $1.2 million a year in 2022 to about $10 million now. He said the program now has 46 horses, many of which have been acquired since last summer. He said even though the caissons are much lighter now, the Army is looking for a more modern caisson for the future.
