IT was high time the National Credit Regulator (NCR) acted against reckless credit providers because of the role these financial institutions played in the over indebtedness of consumers.
CEO of one of the largest debt management companies in the country Neil Roets said he was delighted that providers who promoted over indebtedness were brought to book.
NCR announced it had referred 13 credit providers to the National Consumer Tribunal last week.
The referrals follow investigations by the NCR into microlenders. They revealed these entities were:
1. Extending credit recklessly to consumers;
2. Failing to provide preagreement quotations to consumers;
3. Charging interest in excess of the prescribed maximum rates;
4. Overcharging of service fees;
5. Unlawfully retaining pension cards, bank cards, identity documents and personal identity numbers of their clients as surety.
“The NCR is intensifying its effort to detect reckless lending, the retention of consumer bank cards and identity documents,” says NCR manager of investigations and enforcement Jacqueline Boucher.
According to the NCR, credit providers that keep pension cards, bank cards and identity documents are committing a “criminal offence”.
The NCR is asking the tribunal to order these entities to:
Refund affected consumers;
Interdict them from continuing their unlawful conduct; and to
Impose appropriate administrative fines.
A lack of education on how the credit system works among the general population was a huge problem the private sector and government had to address, Roets said.
“Until such time as financial literacy has become a reality, bodies like the NCR have an important role to play to protect consumers,” he said.
The raids conducted by the NCR in the Limpopo include Thohoyandou and Makhado.
Those raids led to the arrest of eight individuals who had contravened the NCR’s regulations.
The arrested parties were found in possession of 930 bank and pension cards and 149 IDs.
Roets said the best way for financially distressed consumers to get relief from their debt burden was to seek debt counselling.
“A clear indication of just how financially distressed South Africans really are is the dramatic increase in the number of people seeking protection from creditors by going under debt review,” said Roets.
“So far this year, we have had almost 120% more applicants who sought debt relief through the debt counselling process. This is one of the good things government has done for consumers, many of whom would never have managed to get out from under their mountain of debt were it not for the process.”