1) NCA Flashcards
what are the two identifying features of a credit agreement?
- C is owed by D
- there is a cost to D for the agreement
how is a credit agreement extended?
- C lends to D
- C pays third party on instruction of D
- C and D agree that D will repay debt at future time
what is the definition of financial inclusion?
all will have timely, fair access to safe, appropriate, affordable financial p/s
what are some of the aims of the NCA?
- promote financial inclusion & resp borrowing
- prevent reckless lending
- balance rights/duties of C/P
- improve consumer access to info
which individuals are considered consumers under the NCA?
- ALL natural persons who borrow money under credit agreement
- very small JPs
which JPs are considered consumers under NCA?
companies, partnerships, trusts, but NOT stokvels
what makes a JP a small JP?
1) amount lent is <250k and not secured by mortgage
2) asset val and annual turnover < R1mil
when is an individual considered a credit provider?
- anyone who lends money in a credit agreement to a consumer
- do not need to lend as part of business or be registered
what are the effects of an unregistered provider?
- will not be able to lawfully enforce agreement
- the agreement will be unlawful and void
who does the provider register with?
the National Credit Regulator
what is the general rule for the NCA to apply to an agreement?
a loan to a customer at arm’s length where there is a cost of credit, will be covered
what are the 5 requirements for the NCA to apply to an agreement?
1) time factor
2) parties def
3) credit agreement def
4) arm’s length requirement
5) territoriality
what does the time factor look at?
when the agreement was entered into
when did the NCA come into force?
1 June 2007
when is an agreement NOT at arm’s length?
- between natural person family members where one is dependent on the other
- loan by company to SH/SH to company
- loan by JP to someone who controls the JP (or vice versa, must be a consumer)
what is the catch-all provision which will make an agreement at-arm’s-length?
if all parties looked after their own interests when negotiating the agreement and there must be no control of one over the other
what does the territoriality req say?
- agreement must be made in OR have effect within SA
- credit provider does not have to live in SA
- cons can apply for exemption of agreement if creditor is outside SA
which agreements will not be considered credit agreements for NCA purposes?
- insurance contracts
- leases of immovable property
- large agreement loan to JP
- credit by insurer to consumer insured, to maintain payment of premiums
- stokvels
- agreement that says the utility provider with defer pmt of utility
when is a credit agreement large?
> = 250k
OR
secured by mortgage of immovable
when will an entire agreement be considered unlawful?
- provider is not registered
- cons is unemancipated minor and unassisted
- cons declared mentally unfit by HC
what must the court do if it finds the agreement to be unlawful?
- declare void
- make any additional order it deems just and equitable
what will happen for the creditor if the agreement is unlawful and thus void?
the provider may only claim back their owed money via unjustified enrichment
which provisions would be considered unlawful?
- provision that defeats the purposes of the NCA
- provision that requires the cust to give up their consumer rights under NCA
- provision that intends to deceive/fraud the cons
what must the court do if they find an unlawful provision?
- remove it
- declare entire thing void
- can make any other J&E order
what are some of the rights of consumers?
- non-discrimination
- apply for credit
- receive agreement in understandable language (must be reasonable to ask creditor)
- protection against unfair market practices
- apply for debt review
what are some of the rights of consumers regarding the credit bureau?
- to info held by bureau (be informed the D’s info is being taken to the bureau)
- to have adverse info held by the bureau expunged
what are the 3 subcategories of credit agreement?
- facility
- transaction
- guarantee
what is a credit facility?
C provides g/s to D or pays money to D or pays money to 3P directed by D and:
- pmt thereof is deferred
- cost to credit
what are all the types of credit transactions?
- pawn transaction
- discount transaction
- incidental credit agreement
- instalment agreement
- mortgage agreement
- secured loan
- lease
- other
what is a pawn transaction?
money lent to D by pawnbrokers who take movable as security and it is returned when loan is repaid / sold if not
what is a discount transaction?
- g/s are provided over period of time & discount is offered for early settlement
- two prices
what is an incidental credit agreement?
g/s are provided over period of time and D gets an account from C. if amount is not paid by specific date, cost of credit is payable through either interest or a higher price.
what is an instalment agreement?
- movable prop is sold to C and price paid in instalments over time which incl. cost of credit
- D can retain ownership, not always
what happens if D defaults on instalment agreement?
C can cancel the contract for breach and get court to repossess the goods
what is a mortgage agreement?
D borrows money from a provider and there is a mortgage bond registered over the immovable of D to secure the loan
what is a secured loan?
D borrows money from a provider and there is cost of credit payable, and security over the movable of D to secure the loan
what is a lease?
- rent to own
- movable is rented to D over time and D pays rent instalments over time
- at end, ownership passes at end
what is the catch-all provision for credit transactions?
any agreement where credit and fees/int/charges are charged where cons borrows money and there is a cost to credit
what is a credit guarantee?
- where a consumer undertakes to settle an obl owing to a provider by another consumer ito an NCA agreement
what are the requirements for a credit guarantee?
- both party providing guarantee and actual debtor must be consumers
- underlying debt must be subject to NCA
example of credit guarantee?
surety
what is a small credit agreement?
R15k or less
what is a intermediate credit agreement?
R15k to R250k
which transactions are always small?
pawn
which transactions are always large?
mortgage
what is the difference between a pawn and secured loan?
pawn keeps all proceeds
what is the conclusion date of a contract?
date that contract kicked off / date from which NCA will apply
what are the aims of the National Credit Regulator?
- promote and support aims of NCA
- regulates cons credit
- deal with cons complaints
who does the NCR keep a register of?
- credit bureaux
- credit providers
- debt counsellors
what are the requirements for the Credit Bureaux?
- register with NCR
- not a natural person
what are the duties of Credit Bureaux?
investigate and maintain consumer credit records
what are the duties of debt counsellors?
- assess for over-indebtedness through debt review
- investigate if credit was recklessly lended
what does the National Cons Tribunal do?
- function like a court and make orders for consumer complaints
what is the status of NCT orders?
same as HC orders, but only certain matters
what does the NCR do if they find that there has been an NCA breach?
issue a compliance notice which tells them how they are in breach, how to fix it, a date by when to fix it (or face a fine).
what orders can the NCT not make?
cannot declare agreement/provision void
what does rescinding the judgement mean?
restoring the judgement
what is the difference between credit facility and incidental credit agreement?
- in incidental, provider does not expect to get money through interest; the consumer only pays interest when in default (to compensate provider)
- in facility, the interest payments are part of the agreement
at what point does an incidental agreement become one?
20 business days after the late fee is charged
