Neelam Rahim | neelam@radioislam.co.za
3-minute read | 17 December 2025

📸 Justice serves: Banks now liable for defective vehicles they finance, giving consumers the power to claim what’s rightfully theirs.

Urgent shifts in accountability are expected across South Africa’s automotive and finance sectors following a landmark Supreme Court of Appeal (SCA) ruling that now holds banks directly liable for defective vehicles they finance.

The judgment, described as groundbreaking for consumers, confirms that banks are not merely credit providers but are legally regarded as suppliers when financing vehicles under credit agreements. This means consumers can exercise their full rights against banks when a financed vehicle turns out to be defective, unsafe, misrepresented, or even stolen.

Consumer Attorney Trudie Broekmaan, who represented Altaf Van Niekerk in the case, explained that the ruling fundamentally reshapes liability. “The court found that the bank where the vehicle is financed is the supplier,” she said, adding that this gives consumers “an opportunity to exercise all of their rights against the bank as the supplier.”

Broekmaan outlined several scenarios now covered by the ruling: vehicles with tampered odometers, mechanical failures such as collapsed gearboxes, undisclosed accident-related defects, or cases where a recently purchased vehicle is discovered to be stolen. “In each of these cases, the bank is now liable,” she said.

The ruling is particularly significant given the challenges consumers face when pursuing claims against dealerships. “We struggle to get money from dealerships. They go belly up, blame the driver, or push consumers through lengthy ombud processes,” Broekmaan noted. “This really resolves many of the consumer issues and hassles that we have.”

Experts believe the judgment will force banks to introduce stricter checks before approving vehicle finance. Broekmaan predicts increased road safety as banks become more risk-averse. “They’re going to check: Is this car okay? Is it unsafe? If it’s unsafe, they won’t finance it,” she said, adding that this will also pressure dealerships to stop misleading consumers.

Importantly, the ruling applies beyond vehicles, extending to all financed assets where the bank retains ownership until final payment. The court referred to banks as “wearing two hats” both credit provider and supplier a position banks have historically resisted. “You cannot simply shirk responsibility because you’re wearing a different hat,” Broekmaan stressed.

However, concerns remain about smaller or lesser-known credit providers. Broekmaan urged consumers to be cautious, noting that nearly 80–90% of vehicle finance is provided by the big four banks. She warned that personal loans used for vehicle purchases, such as some offered by Capitec, may fall outside the protections of this ruling.

The judgment marks a decisive win for consumer rights, signalling a new era of accountability where financial institutions can no longer distance themselves from defective products they help put on the road.

Listen to the full interview on The Daily Round-Up Moulana Junaid Kharsany and Consumer Attorney Trudie Broekmaan.