Business Law National Credit Act 34 of 2005

The National Credit Act: Objectives Aims to promote fair, competitive & accessible credit and to protect consumers by: Prohibits unfair marketing Provides information to consumers System to resolve disputes Debt reorganisation Credit bureaux etc

Who does it apply to? Every credit agreement except: Juristic persons with asset value or T/O in excess of R1 million The State Credit provider located outside RSA Large Credit Agreements

Types of Credit Agreements Small Credit Agreements Intermediate Credit Agreements Large Credit Agreements

Small Credit Agreement A pawn transaction, credit facility or credit transaction of less than R10 000

Intermediate Credit Agreement A credit facility or credit transaction of between R10 000 and R250 000

Large Credit Agreement A mortgage agreement, credit facility or credit transaction of more than R250 000

Regulation National Credit Regulator National Consumer Tribunal Regulations Register if more than 100 agreements or total exceeds R500 000 Credit bureaux to register Debt counsellors to register

Consumer Rights Right to apply for credit Right to reasons for refusal Right to information in official language Right to plain & understandable language Right to receive documents Right to confidentiality

Credit Marketing No automatic agreements unless refused No automatic credit limit increases If comparing alternatives show costs of each

Prevention of Reckless Credit No reckless credit granting Assess consumers understanding of risks & costs, rights & obligations, financial history & financial means Recklessly granted credit may be set aside

Debt Review Consumer may apply to debt counsellor to be declared over indebted Debt counsellor investigates & if over indebted makes recommendation to Magistrates Court If not over indebted may suggest parties voluntarily agree on debt rearrangement

Debt Review If over indebted – Mag Court to receive debt counsellor recommendation and decide if to reject or to declare any agreement reckless or rearrangement of consumer obligations If not over indebted & creditor rejects DC recommendations, DC may refer to Mag Court

Unlawful Provisions Any clause in a credit agreement that does any of the following is unlawful: Deprives consumer of any statutory rights Exempts CP from liability Excludes any implied warranty States that no warranties were made before agreement States that goods have been received (if not) Forfeits any money paid if default Requires deposit of ID book, ATM card etc etc..

Other protections Consumer must advise CP of address where goods kept & of change of address Pawn brokers must specify date on which agreement ends & must deliver goods if paid by this date Limits on costs of credit CP must provides statements to consumer

Termination On payment in full By rescission within 5 days (unless at CP premises) Early settlement Surrender of goods Debt enforcement by court order