Reckless credit providers to face tribunal

Cape Town - Thirteen credit providers have been referred to the National Consumer Tribunal by the National Credit Regulator (NCR) for breaching the National Credit Act (NCA).

The referrals followed investigations conducted by the NCR across the country into microlenders.

The investigations showed, among other things, that lenders were overcharging service fees, extending credit recklessly to consumers, and unlawfully retaining pension cards, bank cards, identity documents and personal identity numbers (PIN) of their clients as surety.

NCR manager of investigations and enforcement Jacqueline Boucher said: “The NCR will continue to take enforcement action against entities who extend credit recklessly to consumers, and reminds credit providers that keeping pension cards, bank cards and identity documents is a criminal offence.”

The NCR also requested that the tribunal order the credit providers to refund the affected consumers, interdict them from continuing with their conduct, and impose administrative fines.

To address the issue of reckless lending, the NCA was amended last year, so that credit providers now have to conduct rigid affordability assessments before they can lend. One of the reasons for the amendment was to prevent overindebtedness.

But DebtSafe’s debt management expert, Wikus Olivier, said consumers were caught in dire financial struggles and can’t make their debt repayments.

“In the beginning of last year, the company launched a survey where we asked participants if they have money left over at the end of the month.”

Of the respondents, 51 percent indicated they couldn’t make their repayments at the end of the month.

Despite the amendment, Deputy Credit Ombudsman Riana Steyn said reckless lending was still one of the main complaints dealt with.

“We see hundreds of cases where consumers feel that something is not right when it comes to their payments,” said Steyn, adding that in 67 percent of all credit-related cases reported to them, the consumer was in the right.

“To prevent falling into default people need to contact us before they get a bad credit record,” said Steyn.

nicolette.dirk@inl.co.za

CAPE TIMES