MFSA Warn About Illegal Credit Providers
Beware Loan Sharks
MFSA are warning consumers about illegal credit providers
Just as Debt Counsellors warn consumers to be 100% sure they are dealing with an NCR registered person when discussing their debts, so too credit provider organisations want to help consumers avoid loan sharks.
The National Credit Act (NCA) has a lot of rules that credit providers have to follow when giving out credit. Any person who offers credit for a fee or adds interest to money loaned is a credit provider and has to register and report to the NCR. This helps consumers avoid unlawful charges, fees or interest. This is designed to help protect consumers from people who lend money and demand unreasonable interest rates or hold onto consumers’ documents or bank cards as surety (which is illegal).
A report by one organisation a few years ago said as many as 1 in 10 houses in South Africa may be lending money to people illegally. These loan sharks or Mashonisas have a bad reputation for huge fees and even using violence to collect on debts.
How To Spot A Loan Shark
Micro Finance South Africa (MFSA) is an association who represents many smaller credit providers in South Africa (who are properly registered with the NCR). They have shared a simple test on how consumers can know if they are dealing with a real NCR registered law abiding credit provider or not: