Credit Provider Fined R1 Million
According to the National Credit Act if a person or company want to issue credit to consumers they have to register with the National Credit Regulator. The idea behind the legislation is to stop the prevalence of loan sharks in communities across South Africa. These loan sharks have a terrible reputation for taking advantage of those they loan funds to.
The NCA also requires that after registration the credit provider pay an annual fee so that the NCR can keep an eye on who is currently in business. The NCR have reminded registrants that they do not have to remind them of the annual renewal of their registration fee (though they do via email normally). If the annual renewal fee is not paid then the registrant is technically not allowed to trade.
Recently the National Credit Regulator took action against an unregistered (unrenewed) credit provider Akudle Kutshiyele who operate in Nelspruit in Mpumalanga. The firm had let their registration lapse without renewing but had continued to offer new credit to consumers. The matter was referred to the National Consumer Tribunal who handed down a R1 million fine.
The fine covered not only offering new credit while not renewed but also granting credit to consumers without checking if they could afford it. They also on many occasions did not inform consumers in advance in a quotation or “pre agreement”document of what the total cost of the credit will be. This means that they were offering “reckless credit”.
Akudle also took consumers bank cards and ID books from consumers borrowing funds in an effort to enforce payment of their loans. This is illegal and if a credit provider (big or small) ever ask you for them you should report the matter to the NCR as soon as possible or simply refuse.
The handing down of the fine came at almost perfect timing as the NCR found themselves in front of parliament facing a lot of pressure to report on investigations into the collapse of African Bank and who was responsible and demands for more effective policing of the credit industry. The NCr pointed to recent enforcement action against 44 smaller credit providers and this big fine in their defense. The Parlimentary committee though were more focused on prosecution against some of the large name credit providers who have made the NCRs media releases about contraventions such as Lewis Stores. They and others question why these matters have not been heard before the NCT. At a recent NCR Workshop comment was made by the NCR that the NCT could not even attend as they were busy trying to clear the backlog in their cases.