Module Guide Notes Flashcards
Discuss all the exclusions from the Banks Act.
The South African Reserve Bank (SARB): The SARB is the central bank of South Africa and is not subject to the Banks Act. This is because the SARB has a unique role in the economy and is not subject to the same commercial pressures as other banks.
Other central banks: Other central banks are also exempt from the Banks Act, in recognition of their unique role in the global financial system.
Cooperative banks: Cooperative banks are a type of mutual bank that is owned by its members. They are subject to a separate regulatory framework, the Cooperative Banks Act.
Mutual banks: Mutual banks are another type of mutual bank. They are also subject to a separate regulatory framework, the Mutual Banks Act.
Stokvels: Stokvels are traditional savings and lending groups that are common in South Africa. They are exempt from the Banks Act, but they are subject to regulation by the Financial Sector Conduct Authority (FSCA).
Specific savings and credit groups with a common bond: Certain other savings and credit groups with a common bond are also exempt from the Banks Act. These groups are typically small and tightly-knit, and they are not considered to pose a systemic risk to the financial system.
Compare the different tiers of banks available in SA
Tier 1 banks: These are the largest and most well-established banks in the country. They have a wide range of products and services, and they operate a large network of branches and ATMs. Tier 1 banks include Standard Bank, FirstRand, Absa, and Nedbank.
Tier 2 banks: These banks are smaller than the Tier 1 banks, but they still offer a wide range of products and services. They may have a more limited branch network, but they often have a strong presence in certain regions or market segments. Tier 2 banks include Mercantile Bank, Investec, and Capitec Bank.
Tier 3 banks: These are the smallest banks in South Africa. They may focus on a specific niche market, such as small businesses or agricultural customers. Tier 3 banks often have a limited branch network, but they may offer competitive interest rates and fees. Tier 3 banks include Mutual & Federal, African Bank, and Ubank.
Discuss the sources of banking law in SA.
Primary sources
Banks Act, 1990: This is the primary law governing the regulation and supervision of banks in South Africa. It sets out the requirements for banks to obtain a license, the prudential standards they must meet, and the conduct they must adhere to.
South African Reserve Bank Act, 1989: This Act regulates the South African Reserve Bank (SARB) and the South African monetary system. The SARB is responsible for supervising banks and ensuring that they comply with the Banks Act.
Other legislation: Other laws and regulations that may be relevant to banking law include the Financial Services Regulation Act, 2017, the National Credit Act, 2005, and the Consumer Protection Act, 2008.
Secondary sources
Court decisions: Judges interpret the law when they decide cases. Their interpretations are called case law or precedent. Case law is a binding source of law in South Africa, and it can be used to guide the interpretation of banking laws and regulations.
Textbooks and academic articles: Textbooks and academic articles written by legal scholars can also be helpful sources of guidance on banking law. These sources can provide insights into the historical development of banking law, as well as the current state of the law.
Discuss the functions of the SARB.
Monetary policy: The SARB’s primary function is to protect the value of the South African rand. It does this by setting and implementing monetary policy. Monetary policy is the set of tools that the SARB uses to manage the money supply and interest rates.
Financial stability: The SARB is also responsible for promoting financial stability in South Africa. This means ensuring that the financial system is safe and sound, and that it is able to withstand shocks. The SARB does this by supervising banks and other financial institutions, and by developing and implementing regulatory policies.
National payments system: The SARB is responsible for managing the national payments system. This is the system that allows people and businesses to send and receive money. The SARB does this by overseeing the development and operation of payment systems, and by promoting innovation in the payments sector.
Banker to government: The SARB is the banker to the South African government. This means that it provides banking services to the government, such as managing its debt and processing its payments.
Currency management: The SARB is responsible for issuing and managing the South African rand. This includes designing and printing banknotes and coins, and ensuring that the rand is a safe and reliable currency.
Explain the role of various Acts regulating banking in SA.
Banks Act, 1990: This Act is the primary law governing the regulation and supervision of banks in South Africa. It sets out the requirements for banks to obtain a license, the prudential standards they must meet, and the conduct they must adhere to. The Banks Act also establishes the South African Reserve Bank (SARB) as the supervisory authority for banks.
Financial Services Regulation Act, 2017 (FSR Act): The FSR Act regulates the financial services industry as a whole, including banks. It sets out requirements for financial institutions to protect consumers and prevent financial crime. The FSR Act also establishes the Financial Sector Conduct Authority (FSCA) as the market conduct regulator for the financial services industry.
National Credit Act, 2005: This Act regulates the provision of credit in South Africa. It sets out requirements for credit providers to assess the affordability of borrowers and to protect borrowers from unfair credit practices. The National Credit Act also establishes the National Credit Regulator (NCR) to enforce the Act.
Consumer Protection Act, 2008: This Act protects consumers from unfair business practices. It applies to all businesses that provide goods or services to consumers, including banks. The Consumer Protection Act is enforced by the National Consumer Commission (NCC).
Analyse the bank-customer relationship concerning formation, the underlying contractual nature of the relationship, rights and duties of parties and termination.
The bank-customer relationship is formed when a customer opens a bank account. This can be done by visiting a bank branch, completing an online application, or using a mobile banking app. When a customer opens an account, they agree to the bank’s terms and conditions. These terms and conditions set out the rights and duties of both parties in the relationship.
The bank-customer relationship is contractual in nature. This means that it is governed by the law of contract. This means that both parties have enforceable rights and obligations under the relationship.
The following are some of the key rights and duties of banks and customers in South Africa:
Rights of banks:
To charge fees for their services
To require customers to provide identification and other information
To refuse to open an account for a customer
To close a customer’s account for reasonable cause
Duties of banks:
To keep customer deposits safe
To provide customers with access to their money
To treat customers fairly and honestly
To protect customer privacy
Rights of customers:
To open and close bank accounts
To deposit and withdraw money
To transfer money between accounts
To receive accurate information about their accounts and the bank’s services
To be treated fairly and honestly by the bank
Duties of customers:
To provide accurate information to the bank
To keep their account information confidential
To use the bank’s services in accordance with the terms and conditions of their account agreement
The bank-customer relationship can be terminated by either party at any time. The bank may terminate the relationship if the customer breaches the terms and conditions of their account agreement or if the bank has reasonable cause to believe that the customer is involved in illegal activity. The customer may terminate the relationship at any time by simply closing their account.
When the bank-customer relationship is terminated, the bank must return the customer’s deposits in full. The bank may also charge the customer a fee for closing their account.
It is important to note that the law relating to the bank-customer relationship is complex and there are many exceptions to the general rules set out above. If you have any questions about your rights and obligations as a bank customer, you should consult with a legal professional.
Apply the theory, relevant statues and case law to a set of facts concerning the bank-customer relationship.
To apply the theory, relevant statutes, and case law to a set of facts concerning the bank-customer relationship, it is important to first understand the underlying principles of the relationship.
The bank-customer relationship is a contractual one, meaning that it is governed by the law of contract. This means that both parties have enforceable rights and obligations under the relationship.
Some of the key principles of the bank-customer relationship include:
- Duty of care: The bank has a duty of care to its customers to keep their deposits safe and to provide them with access to their money.
- Confidentiality: The bank has a duty to keep customer information confidential.
- Fairness: The bank must treat its customers fairly and honestly.
These principles are enshrined in both statute law and case law.
For example, the Banks Act, 1990 requires banks to meet certain prudential standards in order to protect their customers’ deposits. The Act also requires banks to treat their customers fairly and honestly.
The Consumer Protection Act, 2008 also protects consumers from unfair business practices, including those engaged in by banks.
In terms of case law, there have been a number of cases that have dealt with the bank-customer relationship. For example, in the case of Trust Bank of Africa v Eksteen (2014), the Supreme Court of Appeal held that a bank has a duty to warn its customers of the risks associated with certain investments.
To apply the theory, relevant statutes, and case law to a set of facts concerning the bank-customer relationship, it is important to first identify the relevant legal issues. Once the legal issues have been identified, the relevant law can be applied to the facts to determine whether the bank has breached any of its obligations to its customer.
For example, if a customer claims that the bank has failed to keep their deposit safe, the relevant legal issue would be whether the bank has breached its duty of care to the customer. To determine whether the bank has breached its duty of care, the court would need to consider the facts of the case, such as the steps that the bank took to protect the customer’s deposit and whether the bank could have reasonably foreseen that the deposit would be lost or stolen.
If the court finds that the bank has breached its duty of care to the customer, the customer may be entitled to damages.
It is important to note that the law relating to the bank-customer relationship is complex and there are many exceptions to the general rules set out above. If you have any questions about your rights and obligations as a bank customer, you should consult with a legal professional.
Explain the nature of payment including solutions therefor.
The nature of payment is the transfer of money or goods and services in exchange for a product or service. Payments can be made in cash, by check, by credit card, or by electronic transfer.
Payments are essential for economic activity to take place. Without payments, businesses would not be able to sell goods and services, and consumers would not be able to purchase the goods and services they need.
There are a number of challenges associated with payments, including:
- Cost: Payments can be expensive, especially for businesses that make or receive a large number of payments.
- Security: Payments need to be secure to protect consumers and businesses from fraud.
- Speed: Payments need to be processed quickly so that businesses and consumers can access their money when they need it.
- Accessibility: Payments need to be accessible to everyone, including people who do not have a bank account or credit card.
There are a number of solutions to the challenges associated with payments. For example:
- New technologies: New technologies, such as mobile wallets and blockchain, are being developed to make payments more efficient, secure, and accessible.
- Government regulation: Governments are also taking steps to regulate the payments industry to protect consumers and businesses.
Some of the most common solutions to the challenges associated with payments include:
- Online payment processors: Online payment processors, such as PayPal and Stripe, allow businesses to accept payments online. These processors typically charge a fee for each transaction, but they can be a convenient and affordable way for businesses to accept payments.
- Mobile wallets: Mobile wallets, such as Apple Pay and Google Pay, allow consumers to make payments using their smartphones. Mobile wallets can be very convenient, but they require consumers to have a smartphone and a compatible bank account.
- Blockchain: Blockchain is a new technology that has the potential to revolutionize the payments industry. Blockchain can be used to create secure and efficient payment systems that are accessible to everyone.
Governments are also taking steps to regulate the payments industry to protect consumers and businesses. For example, the General Data Protection Regulation (GDPR) in the European Union gives consumers more control over their personal data.
The nature of payment is constantly evolving as new technologies and regulations emerge. Businesses and consumers need to stay up-to-date on the latest developments in the payments industry to ensure that they are using the most efficient and secure payment methods.
Discuss the ‘rendering of what is owed’ and ow this is achieved.
The “rendering of what is owed” is the act of fulfilling an obligation or paying a debt. It can be achieved in a variety of ways, depending on the nature of the obligation or debt.
In general, the rendering of what is owed can be achieved by:
- Paying money: This is the most common way to render what is owed. It can be done in cash, by check, by credit card, or by electronic transfer.
- Providing goods or services: If the obligation or debt is for goods or services, then the rendering can be achieved by providing those goods or services. For example, if a customer owes money for a haircut, then the rendering can be achieved by providing the customer with a haircut.
- Performing a task: If the obligation or debt is for a task, then the rendering can be achieved by performing that task. For example, if a contractor owes money for building a house, then the rendering can be achieved by building the house.
In some cases, the rendering of what is owed may require a combination of the above methods. For example, if a customer owes money for a product that they have already received, then the rendering may involve both paying the money and returning the product.
The rendering of what is owed is an important legal concept. It is essential for the enforcement of contracts and other legal obligations. When a party fails to render what is owed, the other party may be able to sue for damages or other remedies.
Here are some examples of how the rendering of what is owed can be achieved:
- A customer pays for a product at a grocery store using their credit card.
- A contractor invoices a client for the construction of a new home. The client pays the invoice by bank transfer.
- An employee works a shift at a restaurant. They are paid for their time at the end of the week.
- A tenant pays their rent to their landlord by check.
- A borrower repays their student loan to the bank in monthly installments.
In each of these examples, the party that owes money or services has rendered what is owed to the other party. This has been achieved in a variety of ways, including by paying money, providing goods or services, and performing a task.
The rendering of what is owed is essential for the smooth functioning of society. It allows businesses to operate, individuals to meet their financial obligations, and contracts to be enforced.
Explain the general rule for payment to be deemed to have taken place.
The general rule for payment to be deemed to have taken place is that it must be final, unconditional, and irrevocable. This means that the payment must be completed and cannot be reversed.
There are a few exceptions to this general rule. For example, payment may still be deemed to have taken place even if it is not final, unconditional, or irrevocable in certain circumstances, such as if the payment is made in accordance with a trade custom or if the parties to the transaction have agreed that the payment will be deemed to have taken place even if it is not final, unconditional, or irrevocable.
Here are some examples of when payment is deemed to have taken place:
- A customer pays for a product at a grocery store using their credit card. The payment is processed immediately and the customer is given a receipt.
- A contractor invoices a client for the construction of a new home. The client pays the invoice by bank transfer. The bank transfer is processed and the contractor receives the funds in their account.
- An employee works a shift at a restaurant. They are paid for their time at the end of the week by check. The employee deposits the check into their bank account and the check clears.
- A tenant pays their rent to their landlord by cash. The landlord accepts the cash and the tenant is given a receipt.
- A borrower repays their student loan to the bank by monthly installments. The bank receives the installments and updates the borrower’s loan account.
In each of these examples, the payment is final, unconditional, and irrevocable. This means that the payment has been completed and cannot be reversed.
It is important to note that the law relating to payment is complex and there are many exceptions to the general rules set out above. If you have any questions about whether or not a payment has been deemed to have taken place, you should consult with a legal professional.
Define ‘money’ and its inclusion and exclusion.
Money is a medium of exchange that is generally accepted as payment for goods and services. It is also a unit of account, which means that it is used to measure the value of goods and services. Money is also a store of value, which means that it can be used to save and accumulate wealth.
There are two main types of money: fiat money and commodity money. Fiat money is money that is not backed by any physical commodity, such as gold or silver. Instead, its value is based on the faith and credit of the government that issues it. Commodity money is money that is backed by a physical commodity, such as gold or silver.
The inclusion and exclusion of money refers to the different ways that people and businesses are able to access and use money. Financial inclusion refers to the ability of individuals and businesses to access financial products and services, such as bank accounts, loans, and insurance. Financial exclusion refers to the lack of access to financial products and services.
There are a number of factors that can contribute to financial inclusion, such as:
- Income level: People with low incomes are more likely to be financially excluded.
- Credit history: People with no or bad credit history may have difficulty accessing financial products and services.
- Race and ethnicity: People of color are more likely to be financially excluded than white people.
- Geography: People living in rural areas or underserved communities may have difficulty accessing financial products and services.
There are a number of ways to promote financial inclusion, such as:
- Government programs: Governments can provide financial assistance to help people with low incomes access financial products and services.
- Financial education: Financial education can help people understand how to manage their money and use financial products and services effectively.
- Technology: Technology can be used to make financial products and services more accessible and affordable.
Financial exclusion can have a number of negative consequences for individuals and businesses. For example, people who are financially excluded may have difficulty saving money, paying bills, and accessing credit. Businesses that are financially excluded may have difficulty accessing capital and growing their businesses.
It is important to note that the definition of money and the factors that contribute to financial inclusion and exclusion vary from country to country.
Explain all concepts relating to payment and their legal effect.
There are a number of concepts relating to payment and their legal effect. These include:
- Offer and acceptance: In order for a payment to be valid, there must be an offer and acceptance of payment. The offer is made by the person who owes the money (the debtor) and the acceptance is made by the person who is to receive the money (the creditor).
- Consideration: Consideration is something of value that is exchanged for a payment. In the context of payment, the consideration is typically the goods or services that are being purchased.
- Capacity: The debtor and creditor must have the capacity to enter into a contract in order for a payment to be valid. This means that they must be of legal age and of sound mind.
- Legality: The payment must be for a legal purpose. If the payment is for an illegal purpose, then it is not valid.
- Finality: In order for a payment to be complete, it must be final. This means that it cannot be reversed.
The legal effect of a payment is to extinguish the debt to which it relates. Once a payment has been made, the creditor can no longer sue the debtor for the debt.
Here are some examples of the legal effect of payment:
- If a customer pays for a product at a grocery store using their credit card, the customer’s debt to the store is extinguished.
- If a contractor invoices a client for the construction of a new home and the client pays the invoice, the client’s debt to the contractor is extinguished.
- If an employee works a shift at a restaurant and is paid for their time at the end of the week, the employer’s debt to the employee is extinguished.
- If a tenant pays their rent to their landlord, the tenant’s debt to the landlord is extinguished.
- If a borrower repays their student loan to the bank, the borrower’s debt to the bank is extinguished.
In each of these examples, the payment has extinguished the debt to which it relates. This means that the creditor can no longer sue the debtor for the debt.
It is important to note that the law relating to payment is complex and there are many exceptions to the general rules set out above. If you have any questions about the legal effect of a payment, you should consult with a legal professional.
Apply concepts, statues and case law to a set of facts as it relates to payment.
To apply concepts, statutes, and case law to a set of facts as it relates to payment, it is important to first identify the relevant legal issues. Once the legal issues have been identified, the relevant law can be applied to the facts to determine whether there is a valid payment and, if so, what the legal effect of the payment is.
For example, consider the following set of facts:
- A customer, Alice, purchases a product from a store, Bob’s Hardware.
- Alice pays for the product with her credit card.
- The credit card transaction is processed and Alice is given a receipt.
In this set of facts, the relevant legal issues are:
- Was there an offer and acceptance of payment?
- Was there consideration for the payment?
- Did Alice and Bob have the capacity to enter into a contract?
- Was the payment for a legal purpose?
- Was the payment final?
To answer these questions, we can apply the relevant law and concepts:
- Offer and acceptance: Alice offered to pay for the product and Bob accepted her payment. Therefore, there was an offer and acceptance of payment.
- Consideration: Alice received the product and Bob received the payment. Therefore, there was consideration for the payment.
- Capacity: Alice and Bob are both adults of sound mind. Therefore, they had the capacity to enter into a contract.
- Legality: The product that Alice purchased is legal. Therefore, the payment was for a legal purpose.
- Finality: The credit card transaction was processed and Alice was given a receipt. Therefore, the payment was final.
Based on the above analysis, we can conclude that there was a valid payment in this set of facts. The legal effect of the payment is that Alice’s debt to Bob for the product has been extinguished.
Here are some examples of how statutes and case law can be applied to sets of facts as it relates to payment:
- Statutes: The Banks Act, 1990 requires banks to meet certain prudential standards in order to protect their customers’ deposits. The Act also requires banks to treat their customers fairly and honestly.
- Case law: In the case of Trust Bank of Africa v Eksteen (2014), the Supreme Court of Appeal held that a bank has a duty to warn its customers of the risks associated with certain investments.
These statutes and case law can be applied to sets of facts as it relates to payment in a variety of ways. For example, if a customer claims that a bank has failed to keep their deposit safe, the bank may argue that it has met its prudential standards and that it has treated the customer fairly and honestly. The court would need to consider the facts of the case to determine whether the bank has breached its duty to the customer.
It is important to note that the law relating to payment is complex and there are many exceptions to the general rules set out above. If you have any questions about the application of concepts, statutes, and case law to a set of facts as it relates to payment, you should consult with a legal professional.
Differentiate between payment a mechanism and a payment system.
A payment mechanism is a way to transfer money from one person or entity to another. It can be as simple as handing over cash or as complex as using a digital wallet to make an online payment.
A payment system is a set of rules and procedures that govern the transfer of money between people and entities. It includes the different payment mechanisms that are available, as well as the institutions and technologies that support those mechanisms.
The key difference between a payment mechanism and a payment system is that a payment mechanism is a tool, while a payment system is a framework. A payment mechanism is used to transfer money, while a payment system provides the rules and procedures that govern how money is transferred.
Explain the scope of the various Acts applicable to payment systems in SA.
National Payment System Act, 1998 (NPS Act): The NPS Act is the primary legislation governing payment systems in South Africa. It establishes the South African Reserve Bank (SARB) as the regulatory and supervisory authority for payment systems. The NPS Act also sets out the requirements for payment systems to be licensed and operated in South Africa.
Banks Act, 1990: The Banks Act regulates the banking industry in South Africa. It also sets out some requirements for banks that provide payment services. For example, banks are required to have adequate capital and liquidity reserves to manage the risks associated with payment systems.
Financial Services Regulation Act, 2017 (FSR Act): The FSR Act regulates the financial services industry in South Africa, including payment systems. It sets out requirements for financial institutions to protect consumers and prevent financial crime. The FSR Act also establishes the Financial Sector Conduct Authority (FSCA) as the market conduct regulator for the financial services industry.
Consumer Protection Act, 2008: The Consumer Protection Act protects consumers from unfair business practices. It applies to all businesses that provide goods or services to consumers, including payment systems providers.
In addition to these Acts, there are a number of other laws and regulations that apply to payment systems in South Africa, such as the Competition Act, 1998 and the Financial Intelligence Centre Act, 2001.
The scope of the various Acts applicable to payment systems in South Africa is broad. The Acts cover a wide range of topics, including the licensing and operation of payment systems, the conduct of payment system participants, and the protection of consumers.
The SARB is responsible for enforcing the Acts applicable to payment systems in South Africa. The SARB has the power to issue regulations, conduct inspections, and take disciplinary action against payment system participants that breach the law.
The FSCA is also responsible for enforcing the Acts applicable to payment systems in South Africa. The FSCA has the power to investigate complaints from consumers and take action against payment system participants that engage in unfair business practices.
The Acts applicable to payment systems in South Africa play an important role in protecting consumers and ensuring the stability of the financial system. The SARB and FSCA play important roles in enforcing these Acts and ensuring that payment system participants comply with their requirements.
