Dear Absa Bank, Standard Bank, FNB, Nedbank, SA Home Loans, Investec and other financial institutions,
Dear Law Society of South Africa,
Dear BASA,
Dear Colleagues,
I write this letter on behalf of conveyancers across South Africa, particularly those in small firms, who are increasingly burdened by the banks’ demands for substantial discounts on bond registration fees. While collaboration between banks, attorneys, and regulatory bodies is essential for facilitating property transactions and protecting the integrity of the profession, the current practice of enforcing unsustainable discounts reflects a concerning imbalance that threatens the future of many legal professionals.
The Double Standards of Compliance and Cost
Banks require conveyancers to adhere to exceptionally strict compliance standards (audits, additional checks, and administrative processes) all of which are costly and time-intensive. While these requirements are understood to protect clients and the integrity of transactions, they place a significant financial burden on law firms. Additionally, some banks require firms to maintain minimum balances in their trust accounts to receive instructions, further straining already tight resources.
At the same time, conveyancers are forced to accept discounts of up to 50% of their fees, and sometimes more. This is beyond unreasonable – it is financially crippling! These discounts do not account for the extensive time, effort, and resources needed to meet compliance requirements. For small firms, this financial pressure is unsustainable. Even larger firms are not immune to the strain, as operational costs continue to rise while fees are devalued.
These forced discounts ultimately filter down to staff, who are now earning less, receiving below-market salary increases, or missing out on bonuses entirely. Attorneys, secretaries, and support staff are working twice as hard just to keep the firm writing decent fees, yet the financial squeeze caused by these discounts makes it harder for firms to fairly compensate them. Imagine if banks were forced to write off 50% of the interest they charge on home loans they grant and money they lend – would they accept this loss the way they expect conveyancers to? The answer is obvious, yet banks demand that attorneys absorb financial losses without hesitation.
A System of Exploitation, Not Partnership
What banks are engaging in cannot be seen as genuine negotiation; it reflects an imbalance of power that leaves conveyancers in an untenable position. Firms that resist are often blacklisted or lose instructions, forcing compliance with these demands as a matter of survival.
Moreover, the financial pressure placed on small firms by these demands is deeply felt, affecting both leadership and team members. As a young attorney in a small firm, I see firsthand how this affects the future of our profession. Many of us entered this field with ambition and the hope of contributing meaningfully to the legal system, yet we are constantly met with obstacles that make long-term sustainability feel out of reach. I see my peers, many of whom are equally passionate about law and property, questioning whether there is any real future for them here. The very firms that should be growing and contributing to a transformed legal sector are instead being strangled by unreasonable financial expectations.
Since all major banks are doing the same, there is no longer even a competitive advantage to offering these discounts from a marketing perspective. The banks are not actually benefiting from this pricing strategy, yet attorneys continue to pay the price, effectively subsidizing a failed marketing model at the expense of their own financial stability. The banks themselves give no discount on their bank charges, nor their interest rate.
Where Is the Law Society?
Attorneys pay thousands of rands every year in membership fees, yet what benefit are we seeing? One of the core functions of the Law Society is to safeguard the interests of the legal profession, yet we hear nothing from them while the industry is being bled dry by these forced discounts. Where is the intervention? What steps are being taken to ensure that attorneys can practice sustainably?
Instead of merely writing to attorneys to respond to frivolous complaints – many of which could easily be resolved without lengthy, time-consuming written responses or expensive mediation hearings – the Law Society should be tackling the real issues threatening the profession. The ongoing exploitation of conveyancers by banks is exactly the kind of challenge that demands immediate and serious attention.
A Breach of Ethics and Competition Law
The conduct of forcing discounts may also contravene principles enshrined in the Legal Practice Council’s Code of Conduct and South Africa’s Competition Act. These practices undermine the independence of attorneys, unfairly disadvantage law firms, and distort the legal market. The Competition Act explicitly prohibits dominant players from engaging in conduct that restricts fair competition.
The Competition Act prohibits abuse of dominance, which includes imposing unfair trading conditions on a market participant. Banks hold a dominant position in the financial services industry, and by dictating deep fee cuts under threat of losing business, they may be engaging in exclusionary or exploitative conduct. Furthermore, the Act prohibits restrictive vertical agreements that substantially lessen competition, such as banks collectively enforcing the same discounting structures that remove any ability for firms to compete fairly.
A Breach of the BASA Code of Conduct
The Banking Association of South Africa (BASA) Code of Conduct outlines ethical business practices that banks must uphold, including fair dealing, non-exploitative practices, and fostering sustainable partnerships. However, the ongoing coerced fee reductions contradict these principles.
The BASA Code emphasizes that banks should not impose conditions on service providers that place them in a financially unsustainable position. By forcing discounts of up to 50%, banks may be in breach, which requires them to treat all service providers fairly and in a manner that does not harm competition or the viability of the services they procure.
Rather than fostering long-term sustainability, these discounting practices risk damaging the legal profession, harming transformation efforts, and limiting consumer choice. If the BASA Code is to have any real meaning, there must be enforcement mechanisms in place to hold banks accountable for behavior that contradicts their own commitments to ethical business conduct.
Why This Letter Is Anonymous
I regret that this letter has to be sent anonymously, but the fear of being persecuted, by the banks in question, leaves me with no choice. The reality is that those who speak out risk losing work and being “blacklisted”, or even facing internal consequences within their firms. I am not alone in this concern – many conveyancer colleagues of mine share the same fears, and have the same views, but feel powerless to act. That in itself speaks volumes about the imbalance of power that currently exists in this industry.
The time for change is now. Let us work together to build a more equitable and sustainable future for the legal profession and the property sector. Let the Banks come forward and abolish this practice or, if they really want to contribute to growing and transforming the industry, contribute to the discounts they offer their clients. If they cant, let the regulatory bodies step up and resolve this!
Yours sincerely,
Disillusioned Conveyancer
This is a problem in the industry. Nobody seems to say anything. Well done for speaking up. Hopefully someone hears you.