The main concern about banks giving out your personal information is whether you know what information is being divulged and to whom, the Banking Adjudicator, Neville Melville, says.
Melville was responding to a recent report in Personal Finance that Absa was giving out its accountholders' confidential information to independent brokers.
Absa maintains that the brokers are employees, and that it is not breaking the Code of Banking Practice by divulging clients' details to the brokers if clients have consented to receive marketing material and to be approached by brokers selling products and investments.
In terms of the Code of Banking Practice - to which South Africa's banks voluntarily bind themselves - when you open a new account, Absa asks you to consent to your information being divulged.
You are also asked to indicate whether or not you wish to receive marketing material from Absa, its subsidiaries or outside companies.
However, if you were a client of Absa prior to the introduction of the code in October 1999, the bank will continue to market products and services to you, and give your information to its brokers, unless you specifically request Absa not to do so.
Melville says he has approached the Banking Council about the code using a negative response strategy to gain your consent. The Banking Council represents the country's banks.
Negative response marketing puts the onus on you to refuse an offer made by a company or organisation. If you fail to say "no", it is assumed that you have accepted the offer.
Melville says bank clients need to understand exactly to what they are giving their consent.
If you give your bank your consent to receive marketing products and services, you should be aware that, in effect, all your information is made available to brokers and other parties associated with your bank.
Personal Finance has a copy of the kind of information that Absa is giving to the independent brokers. The information includes a list of your accounts with the bank, your account numbers, the balance in each account, and the date on which the accounts were opened.
Meanwhile, Johan Reyneke, the managing director of Absa Brokers, says Absa "is operating well within the limits of the Code of Banking Practice Conduct by using certain information to sell accredited investment and insurance products to Absa clients, where such clients have given their consent for us to do so".
Absa maintains that the independent brokers it has contracted are Absa employees and that they are subject to the same contractual obligations as all Absa's broker employees.
These obligations include maintaining the strictest confidentiality in all transactions, business and information regarding clients with which the brokers deal and, particularly, the state of their banking accounts and financial details.
But, Reyneke says, he can understand how certain aspects - such as the wording of the contract - may have given the impression that Absa Brokers was acting in contravention of the code and thus may have alarmed Personal Finance readers.
Since the publication of the article, he says, Absa Brokers has taken several steps, including:
- Removing the word "independent" in the contract with brokers;
- Renegotiating all its contracts with Absa independent brokers;
- Reminding all Absa brokers of their obligations to maintain confidentiality; and
- Meeting Melville to ask him for a ruling on Absa Brokers' mode of operation, marketing policies and employment contracts, to see if these contravene the Code of Banking Practice.
Melville says he cannot give a ruling on Absa's marketing policies and practices, unless a client lodges a formal complaint. He could only express a view on how the Banking Adjudicator's office would probably deal with such matters.