Supreme Court Dismisses MFSA Appeal about Interest Rates
Micro Finance South Africa (MFSA) on behalf of their many smaller credit provider members took on the DTI and NCR when changes to the National Credit Act slashed interest rates on subsequent loans to consumers within the same year. For a while, it looked like MFSA were correct in saying that the DTI had not done sufficient research into the topic before making the changes. The court cases raged until the North Gauteng High Court upheld the DTIs changes to the NCA and Regulations.
‘changes to the National Credit Act slashed interest rates on subsequent loans to consumers within the same year’
This means that credit providers could only charge 5% per month on an initial short-term loan and then it had to drop to 3% if consumers applied for another short-term loan during the same year. This is a common occurrence for those taking pay day loans. Many consumers find they are unable to get through the month without taking yet another and another loan each month (or 2). This would then slowly force the consumer deeper and deeper into debt.
MFSA Appeal to the Supreme Court
MFSA members are set to be hard hit by this cut of +-40% income on subsequent loans and so MFSA appealed to the Supreme Court. The SCA has now dismissed the appeal and this means the 5% to 3% reduction stays in force.
‘this means the 5% to 3% reduction stays in force’