NCR Take Foschini To Tribunal Over Club Fees
Credit providers are only allowed to charge certain fees under the National Credit Act (NCA) and regulations. A club fee is not one of these fees. The NCR has now taken a number of matters to the National Consumer Tribunal (NCT) and asked for rulings and fines against various credit providers.
Some You Win, Some You Lose
In the very first and highly publicised ruling on the topic, the NCT ruled in favour of the NCT and ordered that Edcon pay back millions (more like billions) of Rands to every affected consumer charged a club fee since 2007. This ruling has since been appealed (since Edcon wants to stay in business and keep their investors on board).
The second high profile matter worked out with the opposite ruling and the NCR has taken that one on appeal themselves.
Now the NCR have finished an investigation into Foschini and have seen they also charge a club fee which reflects on the consumer’s monthly statement and is part of the original credit agreement. Since it is included in the original agreement and interest is charged, it then appears to be an illegal charge that is not allowed by the NCA.
In this matter, like the others, the NCR has asked that an audit be done and all consumers identified who ever had accounts since 2007 and then that Foschini figure out how much each one paid in fees (and the interest on them) and how that affected the interest calculations on the accounts and then that the consumers be found and refunded. They have also asked for an administrative fine of a few million as well.
Can SA’s Retail Industry Survive?
You may wonder if something like R20 a month, per person, is a big deal? Apparently, Edcon brought in about R400 Million each month this year in these fees (and let’s not forget any interest charges). Multiply that by 12 months and the figures get large. Multiply that by another 10 years and the figures are vast. Crushing. And…on top of that, you need to figure out who these people are and where they live and their bank details etc. It might be easier to close down and apply for a new CP registration and start with a new brand (Cough Cough African… something or other Cough Cough).
As these matters roll out, it will be interesting to see how investors across the board in retail firms react and if we see similar crashes like happened to African Bank occur with these household name brands or if they can somehow weather the storm and stay in business. African Bank investors were not interested in keeping the bank afloat, rather they wanted to know they were going to make money from their shares. When brands take huge knocks like this then that is not what will happen. The firm will be bleeding money for ages to come. So, why not sell your shares?It is likely that many of these firms will try to make out of court settlements with the Regulator to try to appease shareholders (and stay in business) or simply drag matters out for as long as possible to try to keep their brands afloat.
It is likely that many of these firms will try to make out of court settlements with the Regulator to try to appease shareholders (and stay in business) or simply drag matters out for as long as possible to try to keep their brands afloat and hope for some miracle.
Either way, the NCR is having a huge affect on the industry and potentially the countries retail economy and can be sure that their hard work is now being noticed by the powers that be, at Parliament, who have been pressurising them for some time now to make an impact.