South African creditors are taking approximately 70 000 consumers to court every month for defaulting on their payments. DebtBusters MD and registered debt counsellor Luke Hirst explains why it is vital that you seek help as soon as you begin to fall into arrears with any of your debt repayments. What’s the worst that can […]
25 July 2014
Tens of thousands of people in South Africa have been left in financial difficulty after a promotions company linked to Satinsky, a group offering the ‘Buy a new car for R699′ car scheme, collapsed. Commentators are labelling the group’s offering one of the biggest car finance pyramid schemes in South Africa.
The National Credit Regulator has stepped in to investigate Satinsky as well as claims that several lenders awarded car finance loans recklessly. However, many clients of the scheme have been left in the red and at odds at what to do while the investigation is conducted. Angelique Ruzicka has spoken to a number of experts to find out what you can do:
What is the R699 scheme and why has it collapsed?
The ‘Buy a car for R699 per month’ scheme was started by Albert Venter who created the Satinksy group of companies which managed and ran the scheme. Customers were awarded entry level cars by Satinsky and offered a choice of two contracts.
One contract made the customer pay the full instalments of the car for six years to a bank and the other was a contract with a promotions company based in Hong Kong called Blue Lakes Trading and Promotions.
The idea was that Blue Lakes would pay clients a monthly promotional fee if they sported advertising on their cars. The claim was that if clients opted for the cheaper car and drove more than 2,000 kilometers a month they would end up paying R699 in instalments back to the bank.
But Blue Lakes has recently withdrawn its promotional support and clients have been left footing the bill of the vehicle finance repayments on their own. Many are struggling to make the payments and are getting further into debt as they relied on the income they generated from Blue Lakes to fund the vehicle premiums.
Venter has denied that Blue Lake had ties to Satinsky, but a report by Moneyweb has found a link between the Hong Kong based company and Satinsky. Moneyweb says its investigations show that the shareholder of Blue Lakes in Hong Kong was until recently Gerard Ludi, the father-in-law of the Satinsky Group’s lawyer, Craig Thompson.
Meanwhile, Venter has offered an alternative reward scheme to clients and, while a few have signed up to the deal, many have refused and are demanding their money back. But it appears, so far, that Satinsky hasn’t offered clients that option.
Who is currently investigating Satinsky, the R699 scheme and Blue Lakes Trading and Promotions?
The National Credit Regulator says it is investigating the R699 per month scheme after various media indicated that there was a problem with the way the company was structured and how it was conducting its business. “It [the NCR] will be investigating the entire scheme looking at all aspects of the scheme in terms of their compliance with the National Credit Act (NCA). We will also be looking at the provision of credit in this scheme to ensure that people who were providing credit through the scheme were doing so in line with the Act and conducted proper affordability assessments and that there is no reckless credit,”says Lesiba Mashapa, company secretary at the National Credit Regulator (NCR).
What has Venter or the Satinsky group said or done in response?
In a statement sent via text message to Moneybags, Venter says: “We have complied with the Compliance Notice. We have no intention not to co-operate with any authorities. We will at all times co-operate.”
Venter refused to answer questions about whether Blue Lakes would be sending any money to clients that were due money under the promotion but when asked whether he was helping clients that can no longer afford vehicle finance loans, he replied simply: “Yes, [we’ve] created a rewards program for our clients.”
The NCR confirmed that it had received correspondence from Venter saying he would comply. The NCR has in the meantime conveyed to Venter that advertisements on cars showing the R699 offer need to be taken down. Satinsky has since sent messages to clients to remove the adverts from cars.
At the time of writing some cars are still driving on the roads with the loan offer but the NCR said it would only follow up on the instruction to remove the wording in a couple of weeks.
What have the banks that offered loans to clients through the Satinsky group said?
So far Moneybags has received comments from Absa and Standard Bank. Both have distanced themselves from Satinksy and the deal made between Blue Lakes Trading and Promotions. “The advertising service agreements between Satinsky clients and Blue Lakes Trading and Promotions of Hong Kong are separate agreements to which Absa is not a party and which Absa does not promote in any manner. In addition, Absa is unaware of which clients did in fact conclude such agreements,” an Absa spokesperson says.
But there are allegations that the affordability assessment documents had been tampered with and that incorrect information had been given through to the banks. Some claim that Satinsky altered the information before sending it through to the banks – what are the banks doing about it?
Absa says it is investigating the matter: “We will take appropriate action once the investigation is completed. Preventing fraud is a high priority for us and we have robust controls in place to protect our customers. We ensure that fraud-related threats and risks are fully assessed, understood and managed,” a spokesperson says. The NCR says it is also investing claims that lenders awarded clients vehicle finance loans in a reckless manner.
What steps or action can I take if I signed up to the R699 car scheme?
As the NCR is investigating the matter it is important that you send any complaints to them. “If you feel that credit was given to you in breach of the National Credit Act then you can lodge complaints with the NCR. Our email address is email@example.com,” says Mashapa.
Should I get someone to help me?
If its emotional or even financial support that you need then friends and family can be a big help. But experts are cautioning consumers to be vigilant in getting an unknown third party to handle their financial affairs on their behalf. “Don’t hand out any information to a third party who is not qualified to help you and who you don’t have a contract with,” warns Ian Wason, CEO of debt counselling business DebtBusters.
What if I am struggling to pay my vehicle finance loan – what do I do now?
Wason advises: “You need to talk to your banks and you can renegotiate your loan with them directly.”
If you suspect you have been awarded money recklessly proof of this may lie in the contract with the bank or any affordability assessment documentation. “The first thing I would do is get hold of the original vehicle finance agreement with the bank. Banks should provide you with this. If you have a debt counsellor they should be able to get the form for you. If you are over-indebted you should get into debt counselling,” says Wason.
Mashapa from the NCR adds: “If people are over-indebted they have the right to apply for debt review (debt counselling). And if there is any credit that has been given recklessly that debt counsellor can then say that this debt should be set aside by the magistrates. Consumers also have the right to lodge complaints with us if they think they have been awarded loans in breach of the NCA.”
Both Absa and Standard Bank have confirmed that they are willing to speak to affected customers and restructure loans: “Absa recognises that some of our customers may face financial difficulties as a result of the failure of Satinsky/Blue Lakes to honour their advertising agreements. As a responsible lender, we encourage affected customers to contact Absa Vehicle and Asset Finance on 0860 789 111 to arrange an appropriate repayment plan,” says a spokesperson at Absa.
A Standard Bank spokesperson told Moneybags that the bank was also willing to help: “Standard Bank would be happy to look at assisting customer rescheduling their loans, as we would as part of the normal collection practice for accounts in arrears. Should customers feel that they are not in a financial position to honour their financial commitments, they should contact their bank immediately so that a mutually beneficial solution could be agreed upon.” Call Standard Bank’s customer care line on 0860 123 002 or +27 11 299 4701.
At the time of writing some in the ‘I’ve been done in by ‘Drive a new car from R699 a month’ Facebook group have reported that they have had their loans restructured but with a balloon payment attached. For more about how balloon payments work, click here and for tips on getting the right vehicle finance deal.
Where else can I get support?
Over 2,000 people have joined the Facebook group ‘I’ve been done in by ‘Drive a new car for R699 a month’. Members of the group are sharing information and giving each other moral support. There is talk of a class action suit on the group.
I don’t think I should pay my vehicle finance loan because I believe I’ve been awarded this loan recklessly. Should I stop paying my instalments to the bank or perhaps even wait on the outcome of this potential law suit?
Wason warns against this course of action: “You shouldn’t stop paying because the banks will take legal action against you. Also, the vehicle finance guys are very quick to take away cars if installments haven’t been paid.”
“Contact the banks directly. Class actions can take a long time but they are retrospective so if you have restructured your loan with the bank it shouldn’t affect the outcome of the suit,” says Wason.
Mashapa adds: “It is difficult for me to comment as the investigation is not yet complete. But if people are over-indebted they have the right to apply for debt review. And if there is any credit that has been given recklessly that debt counsellor can then say that this debt should be set aside by the magistrates. Consumers also have the right to lodge complaints with us if they think they have been awarded loans in breach of the NCA.”
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