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NCR vs Resilient Dispute Over ‘Arms Length’ Definition

NCR And Resilient Argue Over Legal Terms

The National Credit Regulator (NCR) is giving property company Resilient a hard time over interest carrying loans they offer their employees. The NCR want Resilient to register as a credit provider and Resilient say they don’t have to.

Resilient offer their employees loans that carry interest (and can be repaid over as much as 10 years). Employees are able to borrow 20 times their paycheck in a loan to invest in the firm. Employees are only able to use these loans to buy shares in the group. Some staff members have borrowed Millions of Rand so far.

The NCR say that since the floor (how little has to be loaned) for amounts that individuals and companies offer before it being considered ‘credit’ has been removed that Resilient need to register as a credit provider according to the National Credit Act (NCA) and regulations.

Section 40 was amended in May 2016 and says that everyone who issues credit now needs to register.

‘This is generally used to prevent family members and spouses from having to register when lending to those closest to them’

Point Of Dispute

The Act essentially says that loans made by parties “at arm’s length” require the lender to register. This is generally used to prevent family members and spouses from having to register when lending to those closest to them. Resilient, however, argue that they and their staff members fall well within the warm embrace of “arm’s length” and don’t need to register. They feel the definition of what is and isn’t within arm’s length has never been clarified at court (as yet) and at the advice of their legal representatives are digging in their heels.

The NCR have indicated that they have always seen staff loans as a form of credit granting and any firm that does so needs to register with them and report regularly on the state of the credit.

‘The NCR say that they have always seen staff loans as a form of credit granting’