The National Credit Regulator (NCR) is seeking legal advice to appeal a recent judgment that set aside a major aspect of its affordability assessment regulations, which riled clothing retailers Mr Price, The Foschini Group and Truworths, says a Moneyweb report.

It notes the judgment was a major win for the three retailers, who took the NCR and Department of Trade and Industry to court to fight the raft of amendments to the regulations in 2015.

The amendments to section 23 of the National Credit Act requires retailers to take additional steps in vetting the existing financial means of consumers, who are either self, formally or informally employed. These steps include consumers presenting three months’ bank statements and payslips in stores; latest financial statements (if self-employed) and being subjected to additional checks with credit bureaus to prove they are worthy of large amounts of credit.

The NCR deemed the amendments as necessary to ensure that reckless lending is avoided while the retailers deemed them cumbersome.

The Western Cape High Court set aside section 23A (4) – dealing with the presentation of bank statements, pay slips and financial statements – on the basis that the section discriminates against consumers who are informally or self-employed and without bank accounts, thus disqualifying them from applying from credit.

Lesiba Mashaba, the NCR company secretary, said the regulator was unhappy with the judgment as it extends to consumers who are formally employed and have the means to produce payslips and bank statements. ‘The judgment removes the income verification requirements entirely from the regulations even for consumers who can produce payslips and bank statements,’ he reportedly told Moneyweb, adding the NCR was considering an appeal.

Full Moneyweb report