The club fee charged by Edcon to its credit customers has been found to be unlawful and in contravention of the National Credit Act (NCA), notes a TimesLIVE report. The National Consumer Tribunal’s judgment followed an investigation by the National Credit Regulator (NCR)‚ which found Edcon charged consumers a club fee on credit agreements. ‘It is now settled that the charging of a club fee on credit agreements is not permitted by the NCA‚’ said Jacqueline Peters‚ manager of investigations and enforcement at the NCR.

The NCA does not allow for any other fees‚ charges or costs to be included in a credit agreement or credit agreement documents‚ irrespective of the nature of the charge‚ fee or cost. ‘This judgment provides clarity to the retailers that they should observe the closed list of fees and charges provided for in the NCA,’ Peters said. The report adds the regulator will request an independent audit of Edcon’s loan book to establish how many consumers must be refunded and the total amount to be refunded from 2007.

A Business Day report suggests the ruling could wipe out much of Edcon’s R400m-a-year club-fee income. It says that although a financial sanction, such as an administrative fine and refund of fees, is still to be announced, the ruling has grim implications, given Edcon’s financial situation. One analyst, who has tracked the regulator and the tribunal, reportedly said the good news for Edcon and other retailers was that final decisions were drawn-out affairs and inevitably diluted by legal challenges. He said there was little prospect of Edcon having to repay 10 years’ fees.

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Edcon is reviewing the ruling with a view to launching an appeal. ‘It is important to note that this judgment relates to the merits of the issue, and does not deal with any sanction, which will only be determined at a later date. This matter has therefore not been finalised, and we therefore can’t comment further on this particular issue,’ a spokesperson said, according to a Daily News report. A TimesLIVE report notes that according to the company’s 2016 financial report‚ it has about 3.4m account holders. Working on the conservative assumption that only half of those are paying monthly club fees of between R34 and R60 – depending on the benefit level – the company earns close to R75m a month in club fees, it says. It was only the club fee which was ‘under contention’ not the club product or membership‚ the Edcon spokesperson said. Asked what the club fee entitles account-holders to‚ he said benefits included preferential rates and savings on gyms and spas; movie and theatre tickets; accommodation and car rental and emergency services‚ as well as education benefits. He would not reveal what percentage of Edcon’s club members actively claim those benefits on a regular basis‚ saying only that ‘Edcon estimates that a member can save up to R17 000 over a year if all the benefits are used on a regular basis’.

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