1. Business Law
National Credit Act 34 of 2005

2. National Credit Act Advance social & economic welfare
Protect the poor & uneducated

3. 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

4. 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

5. Types of Credit Agreements
Small Credit Agreements
Intermediate Credit Agreements
Large Credit Agreements

6. Small Credit Agreement
A pawn transaction, credit facility or credit transaction of less than R15 000

7. Intermediate Credit Agreement
A credit facility or credit transaction of between R and R

8. Large Credit Agreement
A mortgage agreement, credit facility or credit transaction of more than R

9. Regulation National Credit Regulator National Consumer Tribunal
Regulations
All credit providers must register
Credit bureaux to register
Debt counsellors to register

10. 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

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

12. 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

13. 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

14. 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

15. 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..

16. 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

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

18. Who is a credit provider?
The party who supplies goods or services under a discount transaction, incidental credit agreement or instalment agreement
The party who advances money or credit under a pawn transaction
The party who extends credit under a credit facility
The mortgage under a mortgage agreement
The lender under a secured loan
The lessor under a lease
The party to whom an insurance or promise is made under a credit guarantee
The party who advances money or credit to another under any good credit agreement
Any other person who acquires the rights of a credit provider under a credit agreement after it has been entered into

19. Who is a consumer?
The party to whom goods or services are sold under a discount transaction, incidental credit agreement or instalment agreement
The party to whom money is paid, or credit granted, under a pawn transaction
The party to whom credit is granted under a credit facility
The mortgagor under a mortgage agreement
The borrower under a secured loan
The lessee under a lease
The guarantor under a credit guarantee
The party to whom or under whose direction money is advanced or credit granted under any other credit The lessor under a lease
The party to whom an insurance or promise is made under a credit guarantee

20. When will an agreement be a Credit Agreement under the Credit Act?
If it is a credit facility (eg: credit card), a credit transaction (eg: instalment agreement), a credit guarantee (eg: suretyship)
Will not be a credit agreement if it is an insurance policy, a lease of immovable property or a transaction between a stokvel and its members

21. Explain the 3 different classifications of credit agreements
Small agreement – pawn transaction, credit facility or credit transaction with credit limit or principal debt under R15 000
Intermediate agreement – credit facility with credit limit over R or credit transaction (except credit guarantee, pawn transaction or mortgage) with principal debt between R and R
Large agreement – credit transaction with principal debt over R

22. Discuss the general rights of consumers under the NCA
Everyone has the right o apply for credit
No one may be discriminated against in granting credit based on their gender, race, religion, culture, etc
Credit providers may not disclose confidential information of consumers
Consumers refused credit have the right to be told of the reasons why credit is being refused

23. Consumers have the right to receive copies of all documents and in the official language of their choice
Consumers must be provided with all relevant information including all costs and charges relating to the credit
Credit providers may not recklessly grant credit – they have a duty to check the consumer can afford it
The credit provider must not engage in prohibited marketing practices and must give the consumer the option to be excluded from marketing campaigns.

24. Further reading