Areas of Law and Guides
National Credit Act Law
In essence, the National Credit Act is designed to promote a fair and non-discriminatory marketplace in South Africa. As such, credit providers are supposed to do everything in their power to ensure that the manner in which they grant credit always upholds the intentions and requirements of the legislation, while still meeting the varied lending requirements of all its clients in a responsible manner.
This area of law aims to provide protection for laypersons unfamiliar with their legal rights and in an unequal bargaining position to that of big business.
What benefit will you or your business gain from the National Credit Act in South Africa?
Most recent Articles posted
In what is seen as a ‘major victory for consumers’ a registrar in the Western Cape High Court has effectively put a stop to the practice of banks suing consumers in the High Courts for the recovery of outstanding loans.
Two recent ‘landmark’ rulings have put a stop to practices that could add to your distress when you default on your repayments. One protects the debtor from excessive charges – especially legal fees – when you default; and the other stops creditors from taking legal action in the High Court instead of a Magistrate's Court, says financial journalist Angelique Ardé, in an analysis in Business Times.
ANC Mpumalanga bigwig Charles Makola is set to lose his R1.6m Witbank property after he failed to pay R1.3m he owed to Absa, according to a Cape Argus report.
The KZN High Court (Pietermaritzburg) application by the liquidator of VBS Mutual Bank to recover millions owed to it by former President Jacob Zuma, has revealed how the bank was reckless while conducting its business before it collapsed, notes a Cape Times report.
FNB has been found guilty of reckless lending and has had to write off a loan of more than R150 000 to a Gauteng woman who claimed the bank had failed to properly assess her finances when granting the loan.
The Gauteng High Court (Johannesburg), in a judgment written by Judge Roland Sutherland, has confirmed similar rulings in the Western Cape, KZN and Limpopo divisions, that the High Court does not have jurisdiction to release consumers from debt review.
Capitec, which grew into SA’s biggest bank by customer numbers by focusing on those traditionally excluded by commercial lenders, says it has been actively reducing its exposure to low-income earners in anticipation of the recently-approved debt relief legislation.
Local banks are concerned that some of their customers will get away with not having to repay their debt under the National Credit Amendment Act, signed into law by President Cyril Ramaphosa last week.
President Cyril Ramaphosa has signed into law the controversial National Credit Amendment Bill which is geared to provide relief to over-indebted consumers, according to a Fin24 report.
A full Bench of the Gauteng High Court (Pretoria) has reserved judgment in a case that will determine how they deal with applications from consumers who want to get out of debt review before they have been able to pay off all their debts.
Is your bank entitled to clean out your current account’s credit balance – with neither notice to you nor your permission – to settle a separate debt you owe it?
The National Credit Regulator (NCR) has withdrawn its referral of Foschini Retail Group – a subsidiary of listed clothing retailer TFG – to the National Consumer Tribunal for an alleged breach of the National Credit Act.
Borrowers with more than one debt outstanding were given some protection last week when the SCA ruled that the interest rate on short-term loans after the first loan cannot exceed 3% a month. GroundUp reports Micro Finance SA (MFSA) had challenged regulations promulgated under the National Credit Act reducing the interest rate on a second short-term loan taken out in a 12-month period from 5% to 3% a month.
It seems logical that the very strong consumer protections in the NCA (National Credit Act) are designed for commercial situations in which credit is advanced by “credit provider” businesses to “credit consumers”. But does the NCA also apply to non-commercial, once-off loans? Like a loan to a friend or relative? And what about property sales?
Edgars’ right to collect more than R450m in club fees from those who buy on credit is under attack again as the National Credit Regulator (NCR) has applied – and been granted – leave to appeal against a Gauteng High Court (Pretoria) decision that Edcon’s club fees are lawful.
The Credit Ombud, Nicky Lala-Mohan, says it seems there is still widespread abuse of the garnishee order system to deduct debt repayments from employees, despite a far-reaching Constitutional Court ruling tightening up the issuing of these orders. In September 2016, the Constitutional Court confirmed a High Court ruling by Judge Siraj Desai that aspects of the enforcement of emolument attachment (EAO) were unconstitutional, notes a report on the IoL site.
The National Credit Regulator has advised a financially-vulnerable consumer to seek the services of a debt counsellor to ‘assist her with possible over-indebtedness’ but has not found Nedbank guilty of reckless lending practices as contended, notes a Moneyweb report.
The National Credit Regulator is considering appealing a recent Western Cape High Court judgment that on the face of it makes qualification for credit that much easier, notes Daily News. In the case brought by leading retailers Truworths, Foschini and Mr Price, the High Court ruled credit applicants would no longer be required to provide proof of income when applying for credit, as previously required by the National Credit Act.
The Treasury estimates the total debt that could fall under debt extinguishing provisions of the National Credit Amendment Bill proposed by Parliament’s Trade and Industry Committee could range from R13.2bn to R20.7bn, notes a Business Day report.
Debt counselling, implemented as an alternative to sequestration for indebted consumers, is a ‘disaster’ for many consumers, according to practitioners. Rapport notes that the issue of customers wanting to abandon the debt review process has become more complicated with the Western Cape and Gauteng High Courts at odds on the matter.