UPDATES: FirstRand tries to wrestle racist bonds genie back into bottle

Noseweek first reported the discovery of evidence indicating that FirstRand discriminated between bond clients on the basis of race, in March (nose149).

That emerged from a forensic accountant’s analysis of 2,000 cases located in a limited number of neighbourhoods It was immediately dismissed by a morally outraged FirstRand on the grounds that the sample was too small and not representative of its client base.

To no avail. Now a well-known firm of actuaries has just completed a complex statistical analysis of the entire bond “book” – 76,000 home loan accounts – that FirstRand took over from Saambou in 2002. It has found that “for all loan sizes, there exist highly significant differences between the interest rates charged to blacks and to whites”.

Also, when it came to comparing product types (the different branded loan packages marketed by the bank), the actuaries found that black and coloured clients are consistently charged a higher interest rate than white clients.

Even on “high cost” home loans in posh suburbs,  the difference in the interest rate charged to black and white clients was found to be “highly significant”.

In a report, marked “final draft” and dated 19 November 2012, Munro Consulting Actuaries state that, even after loan size, product type, loan amount and suburb are taken into account as possible determinants of the interest rate charged, the bank’s black clients were (and still are) consistently charged higher rates than the bank’s white clients.

“A logical conclusion would be that Saambou has used race to determine what interest rate to charge its clients,” they say.

The FirstRand’s response has been pathetically predictable: within a week the bank’s Sandton attorneys, Norton Rose (formerly Deneys Reitz) had addressed a blustering, petulant (and, for us, laugh-a-minute) letter to the actuaries in which they are informed that “the information on which the report is based is confidential to our clients and their customers. You have no right to be in possession of this information. It is unclear how and where you obtained the information”.

Which, of course is very reassuring, since now we all know for certain that the data which the actuaries have used is genuine and accurate.

Needless to say, their clients wish it to be placed on record that they regard the report as defamatory and dispute its contents.

Apparently oblivious to the futility (absurdity?) of the exercise, the unfortunate attorney (Andrew Strachan) has a go at forcing the genie back in the bottle: “Under the circumstances, we require you to advise us of the source of the information and make immediate arrangements for the return of the information to our clients.

“We will provide you with the contact details of the relevant person to arrange for this to be done,” he says. “We await to hear from you urgently.”

Noseweek is happy to return him to the real world.

The sadness continues.

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