Shoprite has been fined R1m for failing to assess properly whether consumers could afford its loans, says a Moneyweb report. The company – which had turnover in its last financial year of R141bn – was also ordered to appoint a debt counsellor at its own costs following what the National Credit Regulator (NCR) called ‘reckless lending’.

‘This judgment comes after an investigation by the NCR revealed Shoprite entered into credit agreements with consumers without conducting a reasonable and objective assessment of the consumers’ ability to afford the loans,’ NCR chief executive Nomsa Motshegare said.

Some of the conduct of Shoprite that was found to be in contravention of the National Credit Act was that Shoprite – when assessing whether a consumer could afford a loan or not – took into account unverified income of another person, such as a spouse or a life partner,’ she said.

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Shoprite is the first large retailer to be found guilty of reckless lending, says a Business Day report. Shoprite said the finding related to one of its subsidiaries, which had extended credit ‘too easily’ to some of its customers so that they could buy goods from OK Furniture stores. ‘The National Credit Act is a complex piece of legislation, as acknowledged by the tribunal. Our credit-granting offices adhere to strict measures and are satisfied that the current process serves the best interests of its customers and is in compliance with legislation,’ said Shoprite.

The NCR has referred several of the large retailers, including Edcon, Foschini, Price and Lewis, to the National Consumer Tribunal for contravention of the National Credit Act, but those contraventions were related to charging club fees on credit agreements. Shoprite is the first of the large retailers to be charged and found guilty of reckless lending.

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