The National Credit Act (NCA) has put rules in place to ensure that consumers are not taken advantage of when applying for credit. Knowing your rights will help you to ensure that the credit provider acts responsibly.
Accessing credit
- Should your application be turned down you have the right to be provided with reasons.
- A credit provider must provide you with a pre-agreement statement and quotation before you sign the credit agreement. This must disclose the amount borrowed, deposit to be paid (if any), number of instalments, interest payable, any additional charges, credit life insurance, date of first instalment and the date of last payment. Always make sure that you get a pre-agreement statement and quotation before signing.
- You have the right to receive information and documents in plain language. This means that the content, meaning and importance of the document must be easy to understand. Ask if you do not understand. Do not sign unless you understand the terms and conditions of the agreement.
- You have a right to have information held about you treated confidentially. This means the credit provider may use information only for the purpose for which it was given.
Getting information held by a credit bureau
You have the right:
To be informed that the credit provider intends to report negative information about you to a credit bureau before the credit provider reports you;
To receive a copy of your credit record from a credit bureau when you request it. You are allowed one free record per year, but the credit bureau may charge you a fee of R20 for any further records;
To challenge information kept by credit bureaux if you are unhappy with the information and;
For your information to be kept confidential and for your information to be used only for purposes allowed by the Act.
Reckless lending
Although the National Credit Act stipulates rules for providers of credit, not all lenders stick to these rules. If you find you are drowning in debt, you need to assess whether the lender acted responsibly.
What is reckless lending?
In terms of Section 81 of the NCA reckless lending occurs:
When a credit provider fails to conduct an affordability test and proceeds to extend credit to a consumer without assessing the consumer’s other financial commitments;
When a credit provider, after conducting the affordability test and realising that the consumer’s other financial obligations are such that he or she will not be able to service the loan under the proposed credit agreement, proceeds to extend credit to such a consumer or;
When a credit provider fails to explain to the consumer, the risks, costs and obligations under the proposed credit agreement.
Recourse:
- The credit provider must be reported to the National Credit Regulator (NCR).
- The NCR will attempt to resolve the matter between the parties. If this fails, the NCR will refer the matter to the National Consumer Tribunal (NCT) for adjudication.
- The NCT has far-reaching powers, including adding an administrative penalty to the cancellation of registration.
- If the credit provider, besides contravening the Act, is also fraudulent then the matter can be referred to the South African Police Service for prosecution.
Court action?
- The credit provider is required to provide the consumer with a notice in terms of section 129 of the NCA advising the consumer to refer the matter to a debt counsellor, alternative dispute resolution agent or the consumer court to resolve disputes or agree to a plan to bring the payments up to date.
- The debtor is required to respond to this notice within 10 days, failing which the creditor can proceed with legal action.
- In terms of Section 130, the courts require that the credit provider must provide proof that it has delivered the Section 129 notice to the debtor before the matter is heard.