The Loan Company – a firm offering short-term loans at high interest rates – has lost its appeal against the National Credit Regulator and has been slapped with a hefty fine and ordered to refund at least 15 clients.

The SCA has upheld the National Consumer Tribunal’s finding that The Loan Company must pay an administrative fine of R250 000 and refund customers of credit agreements found to be non-compliant and therefore unlawful and void. 

TimesLIVE reports that customer complaints against The Loan Company prompted the NCR to investigate it.

After uncovering wrongdoing, it referred the matter to the tribunal which made various orders against the business. This included a declaration that the business had been acting unlawfully.

In one such case The Loan Company advanced R35 000 to a Mr Tselapedi, who handed over his 2002 BMW 5, then valued at R100 000, as security. Tselapedi defaulted, failing to pay back R42 000 by August 3 2016. The company sold his car for R65 000 and retained the entire amount.

Upset by the NCR's findings, The Loan Company appealed to the Gauteng High Court (Pretoria) which heard that it operates as a typical ‘pawn’ broking business, offering short-term loans to people who offer their movable property as security.

The tribunal claimed that ‘the person investigated has engaged in ‘prohibited conduct’’, defined by the National Credit Act as an act or omission that is in contravention of the act.

This led the NCR to seek an order in respect of at least 15 transactions: that The Loan Company be compelled to refund the affected customers and be ordered to return all vehicles to consumers that it is currently holding as security. 

TimesLIVE reports that two judges found that the tribunal's findings ‘cannot be faulted’ and confirmed them.

Company director Guillaume De Rosnay then headed to the SCA arguing again that he had been registered when the agreements were concluded.

Interest rates he charged were not unlawfully high, he said, and the tribunal was wrong to impose the fine. 

TimesLIVE notes that the Loan Company further argued that the legal definition of a ‘pawn transaction’ entitled it to retain all the proceeds from the sale of any pawned asset as it had been retained as security in case of a repayment default. The court disagreed with this contention.

‘A consumer’s obligations "under the agreement” consists only of repaying the amount of the loan advanced to him or her and the lawful charges, including interest, that had been added in terms of the agreement,’ said Judge Phillip Coppin.

This, he said, meant that the company was therefore not entitled to sell off assets and retain the full amount paid, regardless of the outstanding loan amount.

‘Commissary agreements were prohibited in Roman times because they were harsh, unjust and unfair. That prohibition has endured for centuries and still applies in SA law,’ Coppin said.

He dismissed the appeal with costs, ordering that the business comply with the tribunal’s order immediately.

Full TimesLIVE report

Judgment