Essential consumer rights every South African should know in microfinance

As South Africa marks World Consumer Rights Day on 15 March and Human Rights Day on 21 March, it’s a perfect time to take a closer look at the rights that safeguard consumers in the microfinance industry. The National Credit Act (NCA) of 2005 stands as a pillar of consumer protection in our country, guaranteeing fair treatment, transparency, and responsible lending practices.

Niresh Gopichand, risk director at Atlas Finance, points out that many South Africans feel powerless when applying for credit. However, he stresses that the NCA gives consumers specific rights to ensure they’re treated fairly and ethically. “Knowing these rights is key to making smart financial choices and steering clear of dodgy practices,” he says.

Leonie van Pletzen, CEO of MicroFinance South Africa (MFSA), echoes this sentiment: “The microfinance sector is crucial for providing credit access, but it must be done responsibly. Consumers have every right to demand transparency, fairness, and respect from lenders. These aren’t just nice ideas—they’re written into law.”Here are six essential consumer rights in the microfinance industry, rooted in the Consumer Act and the National Credit Act, that every South African should know about:1.

1. Right to information

Consumers are entitled to clear, accurate, and full details about credit products before signing anything. This includes a pre-agreement statement and a quote spelling out the loan amount, interest rates, repayment terms, and any extra costs.

“Never put your signature on a credit agreement if you’re not 100% sure of the terms. It’s your money, and you’ve got the right to know exactly what you’re agreeing to,” Gopichand says.

Van Pletzen adds: “Credit agreements must use plain language. If it’s confusing, you can demand clarity—it’s not just polite, it’s your legal right.”

2. Right to fair treatment

The NCA insists that lenders treat consumers fairly and ethically. This means doing proper affordability checks to ensure loans are granted responsibly. You’ve got the right to ask how your affordability was worked out and to call out any unfair treatment.“Lending recklessly can lock consumers into a debt spiral. Lenders must make sure loans are affordable, but consumers also need to be upfront about their finances,” Gopichand explains.

3. Right to privacy

According to Gopichand, your personal and financial info must be handled carefully. Lenders have to protect your data and only use it to assess your credit application. You’re entitled to know how your info is being used and to object if it’s misused.

4. Right to understand the terms

Credit agreements must be straightforward to grasp. You have the right to get all the paperwork in a language you understand and to ask questions about anything that’s unclear. Understanding your agreement isn’t optional—it’s your right. If something’s confusing, ask for an explanation before signing, Gopichand says.

5. Right to responsible lending

Lenders are legally bound to follow responsible practices, like doing thorough affordability checks and ensuring the loan fits your financial situation. You can challenge any lending that seems reckless or shady.“Responsible lending benefits everyone—it keeps credit as a tool for financial growth, not a burden,” says Gopichand.

6. Right to financial education

You’ve got the right to access financial education and resources to help you make informed credit decisions. This includes understanding the impact of debt, managing repayments, and boosting your financial well-being. Financial know-how is a game-changer. When consumers understand their rights and duties, they’re better prepared to handle the credit world. Gopichand warns against using unregulated lenders, like mashonisas, who often charge sky-high interest rates and use unethical tactics.

“Always check that your lender is registered with the National Credit Regulator (NCR) and the MFSA. Sticking with a trusted, regulated provider means your rights are safe and you’re treated fairly,” he says.

PERSONAL FINANCE