DRAFT HOME LOAN AND MORTGAGE DISCLOSURE BILL

Summary

The SACC supports the objectives of the draft Home Loan and Mortgage Disclosure Bill, but recommends enhancement of the Office of Disclosure's powers to include the institution of charges against lending institutions whose reporting provides evidence of substantial violation of the Equality Act. We further propose that the Office be obliged to compile and publish the information submitted to it in terms of the Bill.

1.0 Introduction

1.1 The South African Council of Churches (SACC) is the facilitating body for a fellowship of 25 Christian churches, together with one observer-member and associated para-church organisations. Founded in 1968, the SACC includes among its members Protestant, Catholic, African Independent, and Pentecostal churches, representing the majority of Christians in South Africa. SACC members are committed to expressing jointly, through proclamation and programmes, the united witness of the church in South Africa, especially in matters of national debate.

1.2 We support the draft Home Loan and Mortgage Disclosure Bill (hereafter "the Bill") as an important mechanism to expose and combat unfair discrimination in lending practices. By requiring all lending institutions to report annually on their patterns of lending--both in terms of applicants' geographic location and income levels--the Bill would help government agencies and civil society organisations to identify neighbourhoods or categories of people whose access to credit is unfairly restricted. Such systemic discrimination prevents us from realising the promise of equality contained in section 9 of the Constitution and amplified in the Promotion of Equality and Prevention of Unfair Discrimination Act (No. 4 of 2000). Discrimination in the housing market also impedes realisation of people's right of access to adequate housing. Finally, we believe the reporting requirements in the Bill are entirely consistent with the constitutional right of access to information held by private persons that is required for the exercise or protection of any right [s. 32(1)(b)], as regulated by the Promotion of Access to Information Act (No. 2 of 2000).

1.3 While we support the objectives of the draft Bill, we also believe that the legislation could be strengthened to facilitate the achievement of its goals. In particular, we believe that further consideration should be given to the powers and functions of the Office of Disclosure that would be established in terms of the Bill. Our concerns relate to the Office's:

• ability to initiate legal proceedings against offenders; and
• obligation to compile or publicise the data it collects.

2.0 Office of Disclosure: Powers to initiate legal proceedings

2.1 Section 4(2) of the Bill empowers the Office of Disclosure to ascertain whether financial institutions are complying with the Bill's reporting provisions, as well as with sections 31 and 32 of the Promotion of Equality and Prevention of Unfair Discrimination Act (hereafter, "Equality Act").

2.2 First, it is not clear why these two sections of the Equality Act--which deal with Implementation of the Act and the Establishment of an Equality Review Committee--have been singled out for compliance. It is possible that the reference was intended to be to sections 26 and 27: Responsibility of persons operating in public domain to promote equality; and Social commitment by all persons to promote equality.

2.3 Moreover, while section 4(2)(d) enables the Office to institute proceedings to verify the validity of information disclosed to it in terms of the Bill and section 4(2)(e) empowers the Office to institute charges against a financial institution that fails to comply with the Bill's reporting requirements, there is no indication of what action the Office can and should take against any institution whose reporting reveals evidence of substantial unfair discrimination. The Office should also be empowered to institute charges against an institution which is found to be in violation of the Equality Act. At the least, it should be required to draw the attention of the Human Rights Commission to any such suspected offence so that the Commission can consider instituting legal action. Similarly, the purpose of disclosure, as listed in section 6(1), should be to enable the Office to assess institutions' compliance not only with this Bill, but also with the Equality Act.

3.0 Publication of data

3.1 Section 6(1) requires every lending institution to disclose, both to the Office and in its annual financial report, a specific set of information identified in section 7(1). Such information relates to the number and value of home loans applied for, granted, refused, and completed during the previous year, broken down by geographic location and borrower demographics.

3.2 Section 7(2) further requires that the information furnished in terms of section 7(1) "be given on a home loan by home loan basis as well as by way of aggregate figures." While it may be seen as relevant to require such detailed information to be made available to the Office for independent assessment, it seems impractical (as well as a potential breach of confidentiality) to require this raw information to be published in an annual report.

3.3 We would prefer to see an obligation placed on the Office to compile the information provided to it and to make it regularly available via the Web or other form of publication. This would facilitate investigation of redlining or other discriminatory lending practices that might be undertaken by community or other civil society organisations.