The National Consumer Tribunal has ruled in favour of the National Credit Regulator (NCR), which called for the deregistration of microlender HD Finance Group after the company was repeatedly found to be breaking the law.
This week, the tribunal found that HD Finance was guilty of retaining and using clients' bank cards and personal identity numbers (PINs) as a means of collecting money owed to the company.
This is a direct contravention of the National Credit Act, which came into effect in June 2007.
Jan Augustyn, the manager of investigations and prosecution at the NCR, says that, at a hearing on February 3, the tribunal ordered that the registration of HD Finance be cancelled with effect from April 3, unless HD Finance can prove to the NCR before then that its 22 branches are fully compliant with the Act.
If HD Finance is deregistered, the company will not be allowed to approve any new loans. Existing clients will still be required to make their loan repayments but HD Finance will not be allowed to retain their bank cards.
This is not the first time HD Finance has locked horns with the regulator. In 2001, it was fined R20 000 by the Micro Finance Regulatory Council (replaced by the NCR) for retaining clients' bank cards and PINs and not providing clients with copies of their contracts.
Last year, the company was one of 14 credit providers issued with a compliance notice by the NCR for the same offence.
The NCR applied to the tribunal to have HD Finance deregistered as a credit provider after a subsequent investigation revealed that the company had failed to comply with the notice.
Says Augustyn: "We can not have registrants who deliberately contravene the Act. The regulator will not be ignored compliance notices must be taken seriously."
Since June 2007, the NCR has issued 24 compliance notices to credit providers, 19 of which related to the retention of clients' bank cards and PINs. Nine of the 24 have since fallen in line with the NCA, while two credit providers have been deregistered.
Augustyn says the remaining credit providers issued with compliance notices are either in the process of assessment by the NCR or have already closed down.
The case prosecutor, Gideon Mashamaite, cautioned errant credit providers to take note of the ruling and be warned that the tribunal would come down hard on those companies caught breaking the law.
The court application by the NCR for a declaratory order on the interpretation of debt review provisions in the NCA will be heard in the Pretoria High Court next week. The NCR is asking for clarification on the powers and roles of magistrates in debt review proceedings as provided for in the Act.
The application is being opposed by Absa, First National Bank, Standard Bank, Nedbank, the Credit Providers Association of South Africa, the Furniture Traders Association of South Africa, Onecor and Mr Juselius, a debt counsellor.
Call Gabriel Davel, the National Credit Regulator, on 0860 627 627 (sharecall). Fax to 011 805 4905, post to PO Box 209, Halfway House 1685, or email info@ncr.org.za or visit www.ncr.org.za