National Credit Act 34 of 2005
Overview
Protection of Consumers
• To promote a fair & non-discriminating market for the access of credit
• To prohibit unfair practices
Responsible credit granting practice
• Prohibit reckless credit granting• Provide for general regulation of consumer
credit• Provide debt restructuring in cases of over-
indebtedness• Establish NCR & National Consumer Tribunal
Types of Credit Agreements
• Credit facility eg credit card• Credit transaction eg pawn transaction;
discount transaction; instalment transaction; mortgages, secured loans, leases; credit guarantees (suretyship)
Exclusions under NCA
• Policy of insurance• Lease of immovable property
Consumer rights and duties
• Right to apply for credit, free of discrimination against the borrower
• Right to be protected against discrimination on the granting of credit
• Right to plain and simple language being used in credit agreements
Consumer rights and duties
• Right to receive a cop oyf credit agreements• Right to privacy regarding personal
information• Right to free Credit Bureaux record once a
year• Right to assistance by debt counsellor
• Right to reasons why credit application may have been refused.
Fees and Charges
• Closed list of fees, charged interest & items a credit provider may recover from consumer
Debt Review
• Consumer may apply to debt counsellor to be declared over-indebted.
• Debt counsellor may recommend that the magistrates’ court make an order that one or more of the consumer’s credit agreements should be declared reckless credit; or consumer’s obligation should be rea
• Debt counsellor may recommend that the magistrates’ court make an order that
• that one or more of the consumer’s credit agreements should be declared reckless credit;
• or consumer’s obligation should be rearranged.
Magistrates’ court
• It may reject the recommendation or application
• Credit provider who received notice of court proceedings may not enforce any right under credit agreement until either court has considered the matter.
• S129 of NCA
Unlawful provisions of credit agreements
• Deprives a consumer or credit provider of any statutory or common law rights & obligations;
• Exempt credit provider from liability for any act or representation;
• States that consumer has received goods or services which have not in fact been delivered to the consumer;
Unlawful provisions of credit agreements
• Acknowledges that before the agreement was made, no representations or warranties were made in connection with the agreement by the credit provider;
• Agrees to forfeit money to the credit provider if the consumer exercises the right of rescission
Unlawful provisions of credit agreements
• Appoints credit provider as an agent of the consumer;
• Authorises any person acting on behalf of the credit provider to enter any premises to take possession of the goods;
• Undertakes to sign in advance any document to enforce the agreement;
Unlawful provisions of credit agreements
• Undertakes to sign in advance any document to enforce the agreement;
• Consents to predetermined value of costs for enforcement of the agreement;
• Limits the credit provider’s liability for court action
Unlawful provisions of credit agreements
• Consents to the jurisdiction of any court outside the area inc which the consumer resides or works;
• Agrees to deposit with credit provider an ID, bank account or atm access card.
• Provides personal identification code or number to be used to access an account
Unlawful provisions of credit agreements
• States that the rate of interest is variable.
Four additional protection available to parties to a credit agreement
• Consumer must disclose location of goods.• Obligations are imposed on pawn brokers.• Limits are imposed on the costs of credit.• Statements of account must be provided
Termination of credit agreement
• Rescission• Early settlement.• Surrender of goods.• Debt enforcement by repossession or court
judgement
Rescission
• Consumer can withdraw from lease or an instalment agreement only if it was entered into at a location other than the registered business premises of the credit provider.
• Creditor provider must refund any money the consumer has paid under agreement with seven days after the delivery of the notice to terminate.
Early settlement
• Consumer can terminate the agreement at any time wi.thout notice to the credit provider by payment of the full settlement amount
Surrender of goods
• Consumer under an instalment agreement secured by loan or lease may give written notice to the credit provider to terminate the agreement.
Debt enforcement by repossession or court judgement
A credit provider may go to court for a judgement if:- Consumer has been in default under the credit
agreement for at least 20 days.- At least ten days have passed since the credit
provider deliver a notice to the consumer & consumer has not responded.
- In the case of instalment agreement, secured loan, or lease, the consumer must also not have surrendered the relevant property to the credit provider.
2nd Test
• Monday 01 October 2012• Time: 16h30• Venue: Elco• Scope Contract of Sale