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MFSA Force Service Fee Review

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MicroFinance South Africa (also known as MFSA) has put in an urgent court application in the High Court (in Gauteng) against the NCR and DTI Minister Rob Davies for being ‘in contempt’, or at least in ‘breach’ of court.

 

 

R50 Service Fees

In the NCAA2014 which finally came into effect on Friday the 13th, credit life insurance charges have not been capped. This means that some creditors can potentially exploit this loophole. Back in 2006 the maximum service fee on credit accounts was set at R50. MFSA hold that the National Credit Act says that this amount must be reviewed every 3 years, at least. They are concerned that so far no such review has been conducted and so account service fees have stayed at R50 for nine years now.

Contempt of Court?

On the 4th of  June last year in a case involving Bitline SA ,  Justice Potterill ordered that a review of the service fees (the R50/month) be reviewed within 9 months. The 9 month period ran out at the beginning of March. this is why Mr Hennie Ferreira, Chief Executive Officer at MFSA say of the NCR and DTI Minister: “the respondents are in contempt of court or at the very least in breach of the court order,”.

MFSA’s Concerns

Mr Ferreria says that “the NCR is aware of the fact that Regulation 45 is invalid because it has never been reviewed for nine years, the NCR still prosecutes its members with impunity on the invalid regulations“. He syas this is one of the reasons they have brought the application on behalf of their 1200 members who as he says are “microfinance credit providers operating within the ambit of the NCA,“. He also says that MFSA have been trying to find out if the NCr have done anything about this matter but have had no joy and have only got vague information from the Regulator. In an effort to get some clarity they have now brought the application which will be heard on the 7th of April this year.