SANE Views

Vol.6 No.25, 12 July 2006

Open Letter to Jaco Maree, Chief Executive Standard Bank

Margaret Legum

This open letter was published in the Cape Times on Friday, July 7. Follow the link below.
http://www.capetmes.co.za/index.php?fSectionId=273&fArticleId=3327623

Dear Mr. Maree,

I would be glad if you would confirm my understanding of the contract between your bank and me, your client. I have entrusted the safe-keeping of my money to you, believing that our agreement is as follows. You will charge me - some say over-charge me - to manage my accounts, and you will use my money judiciously to enhance your profits by lending it out when I am not using it.

In exchange for those rights you will keep my money safe. You will ensure that the records of our transactions are accurate, and that my money is not stolen or lost. I must say I have been disturbed in the past when I have been required to accept penalties for mistakes that your staff has made in record-keeping. But that was relatively minor.

Now I notice that some people are having their money stolen by ‘hackers’, while it is in the safe keeping of banks. And those banks, including your own, are not automatically replacing it when that happens. The press is reporting that banks are blaming their clients for the theft, suggesting those clients have not taken adequate precautions to prevent the hackers discovering their banking details from their own computers. The press also says you think that those clients may have been lax in keeping their passwords secure.

Is it true that on the basis of that suspicion your clients may suffer the theft of their money while it is in your keeping, without your taking responsibility for that loss?

If not, and alarmist reports in the press are untrue, I apologize for suggesting you are breaking an implicit contract, thereby alarming a large section of the population – namely those who operate bank accounts. As things stand we feel very insecure.

When I have been impatient while bank staff – foot soldiers, not policy-makers – seem to take forever to record, capture, write up, cross-reference and generally transact what in any other commercial outlet, like a garage, would be done in seconds, I am reminded that banks are peculiarly liable to fraud, since they are guardians of money- filthy lucre, cash, the stuff of dreams. Therefore they must have special procedures in place to prevent fraud.

Having curbed my impatience, however, I am unhappy at the thought that if fraudsters do get through those systems you will put the cost on your clients. That is, your clients pay with patience for the anti-theft systems, and then pay with their money when those systems fail.

If you are standing by the idea that the success of hackers is due to the laxness of your clients, please refer me to that part of the contract, entered into when I opened an account, that tells me what I must do to enhance your safety systems. Where, in other words, is it written that you will look after my money unless my banking details, illegally gained from my computer, are used to steal my money from you? And where have you recorded the steps I need to take to absolve you from responsibility in the event that my money is stolen from your bank.

If you have not received that acknowledgement from your clients, can you absolve yourself from responsibility when their money is stolen while in your vaunted vaults?

I might have more sympathy for your losses were banking a risky enterprise, where small losses can endanger entire institutions, and entail perhaps the collapse of many people’s small fortunes. But they are not. Banking is among the safest of all private enterprise. It is extremely hard to operate in the modern economy without a bank account, so your client base is assured - with a minimum of marketing since your completers are few.

You lend out money, indeed you create money – not you or others’ money, but new money, invented from nothing - on a daily basis in response to requests for loans from gilt-edged borrowers. Having created that money, you require a rate of interest on its repayment. Nice work if you can get it: economists have called it ‘a free lunch’. Hardly surprising that banks have high rates of profits, and their chief executives are among the highest paid.

What I am saying is that your reported response to evidence of money stolen from your clients – that theft is not your responsibility – might be more understandable if you were operating on the edge of failure, requiring understanding from your clients. But that is not so. If reports are right your are simply using your massive clout to get away with, shall we say, injustice, aka, higher profits.

This may all be a misunderstanding, fostered by a malign press; and we will find that we can entrust our money to banks, who will protect us from theft. I do hope so.