NCR Dodges Questions about Reckless Lending at African Bank

It is shocking and deeply troubling that the National Credit Regulator (NCR) declined to divulge information to investigators compiling a report about the collapse of African Bank.

The NCR is the body tasked with regulating our country’s credit market, while African Bank was one of South Africa’s biggest lenders, before its controversial downfall.

According to the report, the bank was extending 100 000 – 120 000 loans a month, had a loan book of over R60 billion and received 60 – 80 reckless lending complaints monthly, primarily from debt counsellors. This was before its demise in August 2014.

The Myburgh Report

Advocate John Myburgh SC led the investigation into the circumstances that resulted in the curatorship of African Bank. It was discovered that the bank had a very big risk appetite.

Myburgh could not determine for certain whether the 513 bank branches were actually guilty of reckless lending because the NCR refused to respond.

“The one body whose duty it is to investigate alleged contravention of the NCA [National Credit Act] is the NCR,” Myburgh said.

NCR Refuses to Respond

The CEO of the NCR, Nomsa Motshegare refused to provide the commission with details of the bank’s suspected reckless lending practices, when sent questions.

“Instead, [Motshegare] wrote a letter to the Registrar in which she expressed the view that the letter not only undermined the NCR’s regulatory authority and decision-making powers but also exceeded the scope of the investigation given to this Commission by the Registrar,” Myburgh stated in his report.

“The NCR did not take the opportunity offered to her of putting her case to the Commission,” he noted.

Astonishingly, the NCR refused to assist an inquiry that sought to find out why the bank collapsed. This is confusing, as the regulator had originally suggested in 2013 that African Bank be fined R300 million for reckless lending.

But when asked questions relating to the bank’s reckless lending activities, the fine and the resulting R20 million settlement, the NCR would not answer.