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NCR V Lewis – The Rematch

The National Credit Act (NCA) sets out what fees can be charged to consumers making use of credit. One of the fees it does not specifically mention is club fees which many credit providers commonly like to offer. These clubs provide consumers with additional benefits and access to specials etc but fall outside what is contained in the NCA. This has caused some concern that consumers are being taken advantage of or simply that credit providers are breaking the law.

The topic has appeared before the National Credit Tribunal (NCT) who have given rulings that are not obviously consistent against these charges and which hinged greatly on the wording of contracts and the calculations done by the involved creditor providers.

One of the credit providers who came under the National Credit Regulator’s (NCR) investigative microscope over the topic of club fees was Lewis Stores. The NCR and Lewis have butted heads before and in this matter, the NCR decided that the fees being charged by Lewis should not have been charged as they are not explicitly allowed for in the NCA. The NCR have said that charging fees that are not included in the Act is an ‘egregious’ act. Thus began a series of legal bouts between the two parties.

Warrantees on top of Warrantees

Another concern of the NCR’s about Lewis’s dealings with their clients was that consumers were often paying additional warranty charges while the products already had a manufacturer’s warranty built in. So, they were paying for something that the credit provider would never have to honor as the manufacturer would have to sort the problem out (very clever and sneaky). It is unclear if this was maliciously done or simply a gross oversight which cost thousands of consumers a large amount of combined money.

Off To Court

Following it’s success in regard to getting a ruling against another large credit provider over this topic, the National Credit Regulator (NCR) took on Lewis Stores over these club fees expecting another quick win. The legal battles did not go the way the NCR thought they would and resulted in rulings in favour of Lewis.

The most recent disappointment for the NCR was at the North Gauteng High Court who ruled in Lewis Store’s favour. Due to the very serious fines, repayment demands and the probable effect on the value of Lewis shares this ruling was a huge relief for the retailer.

Back To Court

One option when you lose a court battle and are not happy to accept the ruling is to appeal the ruling. The NCR have done so and the Supreme Court of Appeal (Supreme Court) has now given permission for the NCR to appeal the High Court ruling. This means that the matter will soon be heard again in this higher court (Barring any constitutional ramifications, the case cannot go to any higher court).

‘the Supreme Court of Appeal… has now given permission for the NCR to appeal the High Court ruling’

Should the NCR win the case and demand that all club fees are repaid then it may well mean the end of Lewis in it’s current form due to the fall out with investors and the huge cost of the funds that would have to be repaid from the last decade. Should the ruling merely focus on the warrantee overlap it is possible that the credit provider may well be able to survive the investor fall out but it will still greatly hurt the company and share prices. On the other side of the fence, a win would go a long way to restoring some of the NCR’s reputation after the very public defeat and how this derailed the roll out of enforcement across the industry on this topic.