Legal Articles and Guides
National Credit Act Law
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 Legalbrief. 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.
Capitec Bank is the latest target of Viceroy Research – the team that produced an explosive report detailing how Steinhoff cooked its books to hide losses and inflate earnings, says a BusinessLIVE report. Viceroy describes Capitec as a ‘loan shark with massively understated defaults masquerading as a community finance provider’ in a report it released yesterday.
There are so many companies and individuals out there trying to escape their responsibilities of payment of monies due to others. It is distasteful at the least, but people often loan goods or services or even monies to somebody. They promised to pay you back for services, goods or monies lent.
The National Credit Regulator (NCR) has stepped in to investigate a case of alleged reckless lending against Nedbank after reading about it in the press. Moneyweb previously reported that retired education specialist, Myrlene Pieterse, approached the Ombudsman for Banking Services on behalf of a financially uneducated employee, contending that Nedbank engaged in reckless lending practices by not adequately explaining the implications of the credit.
Johannesburg attorney Gilad Cohen believes the Constitutional Court’s decision to dismiss an application to access the court by defaulting debtors who cannot meet their home loan payments does not help to alleviate unscrupulous behaviour by resellers, according to a Business Day report.
Despite the Constitutional Court’s landmark ruling on the illegality of certain practices in the administration of garnishee orders – made more than a year ago – activists claim that fee-gouging and fraudulent court orders are continuing unabated, according to Business Day. Lisinda Bailey, one of the applicants in the Western Cape High Court case on garnishee orders that was confirmed by the Constitutional Court, says her life was ruined by the irresponsible granting of credit and subsequent garnishees.
The National Credit Regulator (NCR) has directed BMW to refund its customers for charging them an on-the-road fee on credit agreements, says a TimesLIVE report. The regulator said it was not aware what the fee was for as BMW did not explain when it inquired. The charges ranged from R3 000 to R6 000.
The debt distress industry is booming with about 16 000 South Africans signing up each month for debt review as allowed under the National Credit Act (NCA). A Moneyweb report says the number of SA consumers in distress has grown 61% since the NCA became law in 2007, while the number of credit-active consumers has grown 44% to more than 24m, according to figures from the National Credit Regulator’s Credit Bureau Monitor.
Municipalities will have to change their debt-repayment and recovery policies to avoid falling further into the red, says a Business Day report. According to figures released recently by the Department of Co-operative Governance and Traditional Affairs, municipalities owe creditors more than R15.2bn.
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 Gauteng High Court (Pretoria) has ordered that regulations capping rates and fees on short-term credit agreements be reviewed and set aside. This is on the grounds that the National Credit Regulator (NCR) and the Minister of Trade and Industry failed to consider the effect these caps would have on the microlending industry and the provision of short-term credit to consumers.