Legal Articles and Guides
National Credit Act Law
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.
The number of consumers with impaired credit records has risen in the three months to June, despite the National Credit Regulator’s (NCR’s) efforts in putting stringent affordability criteria in place. A Business Day report says the NCR’s quarterly credit bureau monitor – released yesterday – showed that of the 24.08m people with lines of credit open, 9.67m or 40.2% had impaired records. This rose 124 000 on the previous quarter.
This week’s Constitutional Court judgment to change the management of emolument attachment orders (EAOs) is regarded as a ‘100% win’ for indebted people, according to Odette Geldenhuys, a senior associate at Webber Wentzel. A Fin24 report notes Geldenhuys is the pro bono attorney for the applicants who initially brought the case in the Western Cape High Court last year.
Almost R2m emolument attachment orders could be affected by a Constitutional Court judgment due to be delivered today, says a Business Day report. It adds the ground-breaking case was originally heard in the Western Cape High Court in February 2015, and it challenges the constitutionality of the process of granting emolument attachment orders in the context of unsecured lending.
If you are a bank (or other lender), or if you have borrowed money against your property and are facing financial difficulty, you need to know about a recent High Court decision declaring that a bank's loans to a farming couple had been granted "recklessly", setting aside the loans, and cancelling the mortgage bonds.
The scope of the National Credit Act 35 of 2005 ("NCA") is wide, resulting in a variety of agreements falling within the ambit of the NCA. Section 4(1) of the NCA extends the application of the Act, to every credit agreement concluded between parties dealing at armâ€™s length and made within, the Republic of South Africa.
The implementation of the National Credit Act has drawn a lot of attention from credit providers and the Act is often blamed for the weak market conditions in retail, motor vehicle sales and the residential property market. The Acts application is far reaching. Implementing the new National Credit Act has also been a cumbersome and expensive exercise for many.
National Credit Act, 2005: Removal of adverse consumer information and information relating to paid up judgments Regulations
With effect from 1 April 2014, a new regulation to the National Credit Act, 2005 will come into force and bring with it, a sigh of relief for consumers. In the past, consumers have struggled to remove adverse consumer credit information from their credit records with credit bureaus even after settling judgments and paying their debts in full and applications to court to achieve the removal of such information upon repayment of the debt are timely and costly. However, with the commencement of the Removal of Adverse Consumer Information and Information Relating to Paid Up Judgments Regulations, this will no longer be the case.
Does your company provide credit facilities to consumers?Â Is your company registered with the National Credit Regulator as a Registered Credit Provider?Â It is important to note that the exemption from the requirement to register as credit provider does not mean that the National Credit Act does not apply.