First National Bank (FNB) HomeLoans is refunding about 50 000 customers a total of almost R10 million which was deducted from their accounts in contravention of the Usury Act.
The overcharged amounts were spotted by FNB itself and it initiated a full inspection of its database to track down every customer who had been overcharged.
The bank is now making voluntary repayments of the incorrectly charged amounts, plus the value added tax and interest.
The mistake arose after changes in the Usury Act in 1990, which allowed for administrative charges to be added to home loans.
FNB initially decided against introducing an administration fee, but did so in 1998 as a result of rising administration costs, Ed Grondel, the chief executive of FNB HomeLoans, says.
Many, but not all, contracts that were signed from 1991 contained a clause that allowed the charging of an administration fee, but this was only implemented in November 1998.
However, the contracts of some customers did not contain the fee agreement and they were incorrectly charged the fee from November 1998 when it was implemented on the other loans on which the bank was entitled to charge a fee.
It is to these customers that the administration fees will be refunded. Home loans granted since November 1998 have all had the administration fee included and have been correctly charged.
Grondel apologised for the error and gave the assurance that all repayments, which will vary from R5.70 to R215.00, will be made directly into homeloan accounts by the end of January 2002.