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Punitive action against credit providers

It was high time that the National Credit Regulator (NCR) acted against reckless credit providers because of the growing role these financial institutions played in exacerbating over indebtedness of consumers country wide.

The National Credit Regulator (NCR) has announced that it has referred 13 (thirteen) credit providers to the National Consumer Tribunal (Tribunal) in the last week.

The referrals follow investigations conducted by the NCR across the country into micro-lenders. These investigations revealed that these entities were:

1. Extending credit recklessly to consumers;
2. Failing to provide pre-agreement 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 (PIN) of their clients as surety.

“The NCR is intensifying its effort to detect reckless lending and the retention of consumer bank cards and identity documents”, says Jacqueline Boucher, Manager Investigations and Enforcement at the NCR.

The NCR will continue to take enforcement action against entities who extend credit recklessly to consumers and reminds credit providers that keeping pension cards, bank cards and identity documents is a criminal offence.

The NCR is asking the Tribunal to order the entities to:

• Refund the affected consumers;
• Interdict them from continuing with their unlawful conduct;
• Impose an appropriate administrative fine.

Lack of education on exactly how the credit system works among the general population was a huge problem that both the private sector and the government should address to engender financial literacy.

Until such time as financial literacy has become a reality bodies like the NCR have a hugely important role to play to protect consumers. The NCR has shown on several occasions that it has the best interests of the consumer at heart and will not hesitate to act against credit providers who mislead or attempt to promote over indebtedness among consumers.

The unlawful retention of clients’ pension and bank cards‚ identity documents and PIN numbers as surety was among the reasons 13 credit providers were referred to the National Consumer Tribunal (NCT) in the last week.

The National Credit Regulator’s (NCR) Jacqueline Boucher on Friday said that it was “intensifying its effort to detect reckless lending and the retention of consumer bank cards and identity documents”.

Earlier this month‚ the NCR conducted raids in Limpopo‚ include areas surrounding Thohoyandou and Makhado‚ as part of its investigations into the 13 credit providers.

Those raids led to the arrest of eight individuals who contravened the NCA. They were found to be in possession of 930 bank and pension cards and 149 IDs.

The best way for financially distressed consumers to get relieve 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.

So far this year we have had almost 120% more applicants who sought debt relief through the debt counselling process – one of the really good things that this government did for consumers, many of whom would never have managed to get out from under their mountain of debt were it not for the debt counselling process.

Neil Roets is the CEO of Debt Rescue.

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