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Blaming Consumers For Non Disclosure

Many credit providers feel that if presented with an accusation of reckless credit granting, they can simply say that the consumer did not give them all the information they needed to make a proper decision about offering them credit.

Is this always true?

Lying to Get Credit

If a consumer asks for credit and then lies, perhaps providing fake information about their circumstances, they might be able to trick a credit provider into granting them credit that they actually can’t afford. That would hardly be the credit provider’s fault.

If a credit provider found a person to be lying like this, they would be well within their rights to turn down the consumers application for credit.

Never lie to try get credit!

Checking the Facts

Rather than just relying on what a consumer says about their situation, the National Credit Act and regulations actually require credit providers to check the facts for themselves before granting credit.

‘the National Credit Act and regulations actually require credit providers to check the facts for themselves before granting credit’

They can do so by checking credit bureau reports, salary slips, bank statement and even their own internal records (like if the consumer banks with them) to verify what the consumer has said.

MQ Finance Vs L Terblanche

A while back Mrs Terblanche approached Marquis Finance (MQ Finance) for vehicle finance to the tune of R1.2 Million for a Ford Ranger Raptor.

At the time, she was transitioning from her old job, after being retrenched, to another. Although she disclosed a smaller salary projection, the credit provider worked on averaged figures from her old employment and had no actual information about her new income. They also reduced the amount she provided for monthly expenses (by a massive R9000) and even totally ignored the fact that she was married in community of property. All this happened without her realising.

As a result, after their assessment of her ability to repay, they offered her the credit and she began making repayments. Of course, she soon ran into financial strain and could not keep up repayments.

Reckless or Not?

When confronted by the allegation of having offered her reckless credit, MQ Finance disagreed and said that the consumer not having given them all the needed and accurate information.

They defended the math they had done and stood by their decision. When the matter went before the National Consumer Tribunal (NCT) they leaned on a complete defence in terms of NCA Section 81(4), effectively blaming the consumer for lying.

The hearing eventually revealed that they were, in fact, the ones who ignored the provided information and even though they could work out she would not have enough to keep up repayments they still granted her the credit.

The NCT then ruled that they should have checked her salary slips (which she did not have yet) and should not have ignored her being married COP. They ruled that the credit provider had not taken reasonable steps to verify information and the credit was granted recklessly.

As a result, they ordered the return of the vehicle and that the credit agreement was cancelled.

They also issued MQ Finance a R100 000 fine to remind them to check the facts properly in the future.

Why it matters to Debt Counsellors: Credit providers may try blame the client for not disclosing all information when applying for credit. This does not mean the credit was not granted recklessly.

Why it matters to Credit Providers: Section 81(4) is not a strong defence if the information provided by the consumer was not properly checked.