Capitec in NCR cross hairs

The NCR give Capitec a hard time

It seems that after it’s recent action against African Bank (for breaking the NCA) the National Credit Regulator (NCR) have turned their eye on Capitec bank.

The NCR are not happy with the way Capitec handle initiation fees on their one month loan product. When a consumer takes out a loan with any creditor then, by law that creditor has to go through an evaluation and credit approval process. The Creditor can then charge an initiation fee, an administration fee and interest on the credit.

The problem that the NCR have identified is that with the Capitec product a consumer can tap into the monthly loan product again after repaying the full amount. Capitec see this as the same loan. However Capitec will at this point do an evaluation again, every time the consumer renews the loan…and they then charge a new “initiation fee”.

However as stated this is, in fact, not a new loan. Therefore no new initiation fee is allowable under the NCA. This would only be allowable if a new loan is issued.

Capitec has said that they recently received a notice from the NCR alleging that they have contravened the National Credit Act but  that they intend to fight the accusation. Mr Stassen of Capitec says the bank did not charge an administration fee, and its initiation fee and interest rate were well below the 5% interest ceiling allowed by the act.

It seems that Capitec may now need to review this product and make some changes.