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NCT Ruling on Child Grants as Income in Credit Applications

The National Consumer Tribunal (NCT) recently heard a case between the National Credit Regulator(NCR)  and JMK Cash Loans. The case revolved, in part, around JMK Cash Loans including consumer’s child grants into their income figure when considering if the person could afford a loan.

The NCR presented a case pointing to several contraventions of the National Credit Act by JMK Cash Loans. One of the areas of concern that they wished the NCT to rule on was that when consumers were applying for loans JMK Cash Loans had been including child support or foster care grants into the consumer’s income. The NCR would like to see this stop as that money is meant not for the parent or guardian but for the child and their living costs etc.

‘that money is meant not for the parent or guardian but for the child’

Credit providers are required by the National Credit Act to calculate if a consumer can afford to repay credit before they grant it. Credit providers even have to make sure that they leave a little cushion in the calculations in case of emergencies. This way consumers should only gain access to funds they can repay. To grant credit knowing that the consumer cannot realistically repay it or doesn’t really understand that they will get into trouble if they do not pay what is required is reckless. Reckless credit is illegal and can be written off or have payments postponed. This is why credit providers protect both themselves and consumers by doing a comprehensive affordability assessment prior to handing out credit.

The NCT ruled on the matter and has said that such grants should not be included in any calculations done by credit providers about whether a consumer can afford credit or not. The NCR was very happy with the outcome of the case and have been reminding other credit providers to keep this in mind when they receive applications for credit from consumers who receive such grants.