Tag Archives: Affordability Assessments

Shoprite Finally Found Guilty of Granting Reckless Credit

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Shoprite Fined R1 Million Over Reckless Credit

Shoprite’s appeal to the High Court to get off from paying a huge fine from the National Consumer Tribunal has been dismissed and they must now pay up and set things straight.

Reckless Credit

The Shoprite group came under fire from the National Credit Regulator (NCR) over possibly granting consumers credit recklessly in 2013 & 2014 (credit they can’t afford or lacking in proper documents, or where the consumer did not understand the obligations). The matter came to light when the NCR was doing some research in 2014 and this later turned into a full investigation.

The National Credit Regulator investigated and brought the matter before the National Consumer Tribunal in 2017. The case was based on what had happened with 9 different consumers. The NCT heard the case and ruled against Shoprite due to their breaching the National Credit Act & Regulations. In particular, they said that Shoprite had not properly conducted assessments to see if consumers could actually afford to pay the credit they were being given.

‘Shoprite had not properly conducted assessments to see if consumers could actually afford to pay the credit they were being given’

While considering whether to grant consumers credit Shoprite had sometimes ignored the consumers’ other debt obligations to other credit providers when working out what they could afford to repay. In some cases, Shoprite was shown to be ignoring or changing figures provided by credit bureaus to try make the consumers’ applications look more promising.

In several cases, after they had done this “creative accounting” the consumer was still shown to not be able to afford the repayments required but Shoprite went ahead and still granted the credit anyway.

In late 2017 the NCT ruled against Shoprite and issued a massive R1 Million fine.

The Appeal

The matter was appealed after the NCT ruling and the huge fine (and risk to share prices) which was granted back in September 2017. This took some time and finally at the end of last year (December 2019) the High Court has heard the matter and decided that the appeal should be dismissed.

Shoprite now has to pay the fine as well as appoint a Debt Counsellor to help the consumers who were affected. The NCR are also putting out calls to the public to come and talk to them if they think they too might have been given credit recklessly by Shoprite.