NCR Crackdown on Creditors
Last week, the National Credit Regulator (NCR) referred 13 microlenders to the National Consumer Tribunal (NCT) for numerous violations of the National Credit Act (NCA). These referrals are part of a greater NCR crackdown on law-breaking creditors.
After investigating a number of dubious microlenders, the NCR crackdown lead to the discovery of reckless credit granting, no provision of pre-agreement quotes, interest charges exceeding the stipulated maximum limits and excessive service fees. Including microlenders unlawfully holding onto bank cards, PINs, IDs and pension cards as collateral. Moreover, these creditors did not keep any records.
What the Regulator had to Say
Jacqueline Boucher, manager of investigations and enforcement at the NCR, stated “The NCR is intensifying its effort to detect reckless lending and the retention of consumer bank cards and identity documents,”
“The NCR will continue to conduct industry-wide investigations to root out breaches of the National Credit Act and abuse of vulnerable consumers.”
The regulator has requested the tribunal order the culpable microlenders to refund the wronged consumers. The NCR has also asked that these creditors be prohibited from continuing their unlawful practices, and/or be appropriately fined.
Registration and Monitoring
The NCR crackdown has not been limited to small credit providers. Big retailers, such as Lewis Stores, JD Group, Findbond, Shoprite and Edcon were all ordered to refund affected consumers for unlawful credit and insurance practices.
As part of the crackdown, the NCR has proposed lowering the registration threshold for credit providers to enable compliance monitoring. A step, Ms Boucher affirms, will promote the fight against unlawful credit practices.
Siphamandla Kumkani, director of credit law and policy at the Department of Trade and Industry (DTI) recently stated in Parliament that Minister Rob Davies had approved draft regulations, concerning registration and related fees, which were soon to be gazetted for public comment.
Getting small and informal creditors registered will allow for the weeding out of crooked creditors.
Crackdown Task Team
The cabinet decision made by the DTI, Treasury and justice department to tackle household over-indebtedness naturally propelled the NCR crackdown.
Accordingly, a task team has been put in place to investigate reckless lending, unlawful credit insurance, excessive credit costs, garnishee orders and judgments, disclosure of terms, and prescribed debt collections.