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National Credit Act

Whenever you buy something on account, or with a credit card, or you get a loan from the bank to do so, you are buying on ‘credit’. In just the second quarter of 2019 alone, the total value of new credit granted was nearly R134.71 billion; whilst the total book of outstanding credit during that period exceeded R1.9 trillion.1 That’s a lot of debt – indeed, it is reported that household debt in South Africa is at 75.4% of disposable income.2

The National Credit Act 2005 has laudable purposes – amongst others: promoting responsibility and fairness in the credit market, addressing imbalances in negotiating power between consumers and credit providers, improving credit information and reporting, preventing over-indebtedness – and, just as important for many, providing a harmonised system of debt restructuring, and debt counselling.

The Act falls under the authority of the Minister of Trade, Industry and Competition, but a lot of administration is effected by the National Credit Regulator.

A. Compliance notices

  1. Certain credit providers, and all payment distribution agents, credit bureaus, and debt counsellors must be registered with the National Credit Regulator (NCR). The NCR can issue notices to anyone engaging in activities which require registration to cease doing so, until they are registered. It is an offence to fail to comply with such a notice.3

  2. If the NCR is of the opinion that a credit bureau fails to observe the various statutory requirements (including reporting of information, confidentiality, rights of access, removal of information etc.) in respect of information it receives or compiles about any consumer or prospective consumer, he can issue a notice calling upon the bureau to comply with the requirements. Failure to comply with the notice is an offence.4

B. Disclosure obligations

  1. If a credit agreement concerns goods, and in terms of that agreement the ownership has not yet passed to the consumer, the credit provider can request the consumer (so can the sheriff or messenger of the Court) to identify the address where the goods are located. It is a crime to give false or misleading information, and to frustrate or hinder a credit provider exercising rights in this regard.5

  2. It is an offence to disclose any confidential information concerning the affairs of any person obtained in carrying out a function under the Act, or as a result of initiating a complaint or participating in any proceedings under the Act, except if required for the administration of justice.6

C. Surrender of goods

  1. It is possible to terminate an instalment agreement, loan or lease in respect of goods, and return the goods to the credit provider. When that happens, the credit provider must give the consumer a value of the goods. If the consumer wants to, he can withdraw the termination and resume possession, but if he does not, the credit provider must sell the goods for the best price. Then it must credit or debit the consumer’s account according to the proceeds of the sale, and provide a notice to the consumer setting this out, together with other information. The credit provider commits an offence if he fails to do any of this.7

D. Prohibited charges

  1. The National Credit Act regulates what a credit provider may charge a consumer for the granting of credit. It is an offence for a credit provider to charge a consumer a fee he is not entitled to charge.8

E. Prohibited collection and enforcement practices

  1. It is a criminal offence for a provider to collect on, or enforce a credit agreement by:
    • holding; or
    • making use of a consumer’s identity document, or his banking card, or the PIN for access to the consumer’s bank account.9

F. The regulator, inspectors and the National Consumer Tribunal

  1. It is an offence to hinder, obstruct or unduly influence any person exercising a power or performing a duty under the Act.10

  2. If you have been directed or summoned to attend a hearing it is a criminal offence to:11
    • fail to appear at the time and place specified;
    • fail to remain in attendance until excused;
    • refuse to be sworn in or to make an affirmation; and
    • fail to produce a book, document or other item as ordered, if it is in your possession or under your control.
  3. It is an offence to:12
    • fail to answer any question fully and to the best of your ability; and
    • give false evidence, knowing or believing it to be false.

  4. If you contravene or fail to comply with any order of the Tribunal, it is a crime.13

  5. It is also a criminal offence to:
    • do anything likely or intended to improperly influence the Tribunal, or a regulator concerning any matter connected with an investigation;14
    • anticipate any findings of the Tribunal or a regulator concerning an investigation in a way that is calculated to influence the proceedings or findings;15
    • do anything in connection with an investigation that would have been contempt of court if the proceedings had occurred in a court of law;16
    • knowingly provide false information to a regulator;17
    • defame the Tribunal or a member of the Tribunal, in their respective official capacities;18
    • interrupt the proceedings of a hearing, or misbehave in the place where a hearing is being conducted;19
    • act contrary to a warrant to enter and search;20 or
    • without authority, enter or search premises, attach or remove any article or document.21

  1. www.ncr.org.za s.v. ‘Consumer Credit Market Report’ June 2019. ↩

  2. www.moneyweb.co.za/moneyweb-soapbox/consumers-cautioned-about-reckless-spending-during-the-festive-season. ↩

  3. Section 54(5). ↩

  4. Section 68(2), section 70(6), section 71(70 and section 72(7). ↩

  5. Section 97(5). ↩

  6. Section 156(1). ↩

  7. Section 127(1). ↩

  8. Section 100(3). ↩

  9. Section 133(3). ↩

  10. Section 157. ↩

  11. Section 158. ↩

  12. Section 159. ↩

  13. Section 160(1). ↩

  14. Section 160(2)(a). ↩

  15. Section 160(2)(b). ↩

  16. Section 160(2)(c). ↩

  17. Section 160(2)(d). ↩

  18. Section 160(2)(e). ↩

  19. Section 160(2)(f). ↩

  20. Section 160(2)(g). ↩

  21. Section 160(2)(w). ↩

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