Giving people money they can’t afford seems to be the very heart of credit granting but not under the National Credit Act of South Africa. Here, you can only give people credit that they can actually afford. This helps people avoid getting trapped in debt and helps credit providers get their investment back. The NCA makes s serious effort to help consumers and credit providers avoid what is known as reckless credit.
What is Reckless Credit?
If a credit provider does not properly inform a consumer of all the costs and obligations of a credit agreement it is reckless of them to give the consumer credit.
If a credit provider does not work out if a consumer can actually afford to repay them then the credit they give the consumer it is reckless.
If a credit provider works out how much a consumer can afford to repay each month and realises the consumer cannot actually afford the credit but still goes ahead and grants that credit it is considered reckless.
In each case, the credit provider can be fined up to R1 Million by the National Consumer Tribunal (NCT) and face other consequences. For consumers, it can mean that they will be repaid all that they have already paid toward such a debt and not have to pay any more (or that they may only have to pay that debt after having already paid off all their other debts first).
On the morning 29th of October, Consumer Friend will be hosting an online webinar to discuss the topic. Debt Counsellors or their key administrative support staff can register to attend and will have the chance to engage with Mr Timmy VD Grijp of the National Credit Regulator on the subject. If you are an NCR registered Debt Counsellor you can follow the link below (click on the picture) to sign up:
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