What’s blockchain got to do with a R60bn class action suit against the banks?
March 26, 2025 Ciaran Ryan Uncategorized 0
Hundreds of homebuyers are taking the banks to court for repossessing their homes and selling them for a fraction of their worth. Advocate Douglas Shaw explains how the repossession crisis in SA came about and how blockchain could solve this. From Moneyweb.
In this eye-opening episode of the Crypto Pod, Advocate Douglas Shaw joins Ciaran Ryan to discuss the systemic injustices surrounding bank repossessions in South Africa. The conversation sheds light on the troubling practices of banks and their legal teams, highlighting the urgent need for legislative reform and greater transparency.
Shaw explains that the courts will soon hear a R60 billion class action suit against the banks for repossessing homes and selling them off for a fraction of their worth. Hundreds of dispossessed homeowners, some who had their properties sold at auction for as little as R10 or R100, are demanding compensation from the banks.
The human cost of ruthless repossessions
One of the most alarming revelations in the discussion is how banks have sold repossessed homes for as little as 1% of their market value.
Shaw expresses shock at the National Credit Regulator’s resistance to transparency, remarking:
“We were genuinely taken aback because, as a regulator, their mandate should be to protect the public interest. Yet they fought us on making this information available.”
This lack of accountability has led to tragic outcomes. In one case, a single mother who had caught up on her arrears was still subjected to multiple eviction attempts.
Shaw emphasises the injustice, referencing the landmark Nkatha judgment, which states that once arrears are settled, the mortgage bond is automatically reinstated. “And yet, some banks still try to go to court,” he laments.
Shaw argues that while banks have been criticised for the opaque practice of securitisation – which involves bundling thousands of mortgage loans together into a bond and then selling it on the JSE – they should in fact be encouraged to securitise more.
This is where the blockchain comes in.
Banks should be encouraged to share information about their securitised assets and allow outside investors to purchase distressed securitised bonds.
Banks have little appetite for this, but outside investors may be interested if they could purchase these at a discount and then nurse the defaulting homeowners back to financial health. This would avert many of the horror stories of home repossessions for which SA has become infamous.
The role of lawyers and legal tactics
The conversation also delves into the aggressive behaviour of banks’ legal teams. Shaw shares his courtroom experiences, noting how bank lawyers often act in a “heartlessly nasty and vindictive” manner. He contrasts this with his experiences in other legal cases where civility prevails. “They go to court without telling me, totally against the rules, and then claim they did [tell me]. You only get this from bank lawyers,” Shaw asserts.
Ryan adds to this, speculating on possible external pressures.
Shaw responds: “I often worry that banks try to capture journalists and lawyers by threatening to withhold advertising or business. There should be laws against that.”
Legislative gaps and needed reforms
Shaw argues that the concept of repossessing and auctioning homes as a “last resort” – which the banks claim they do in their responses to the class action lawsuit – is currently too vague. Banks claim they sell as a last resort, but in reality, they act at their own discretion.
“Surely, if a person is now able to pay their bond, it is not a last resort,” he asserts.
Shaw has drafted a proposed law to define these circumstances more clearly and calls for an independent third-party mediation system, similar to models in countries like the Netherlands.
He criticises the current structure where the banking ombudsman is funded by the banks, suggesting that this creates a conflict of interest. “They should be paid directly by the government, perhaps funded through a bank tax, but not through direct payments,” he insists.
Signs of progress and hope
Despite these challenges, Shaw acknowledges improvements due to persistent legal opposition.
“Some banks have responded well, and it’s encouraging that we got the reserve price rules [which set a floor price for homes sold at auction] changed in 2017. It restores my faith in the system to some degree,” he says. However, he notes that sales still occur at 50% to 70% of market value, underscoring the need for further reforms.
Shaw highlights the deep injustice faced by victims of apartheid who, after building equity in their homes, lost everything in this new democracy.
“They were going to retire okay, and then the bank sold their house for R100. How evil is that? Let’s face it, it’s evil.”
This compelling podcast is a must-listen for anyone interested in justice, financial fairness, and the human cost of corporate greed. And how data sharing using the blockchain could help solve this. http://class action suit against banks