7. National Credit Act, 2005 (NCA) (Act 34 of 2005)

Question 1

7.1 Purpose of the NCA

Answer 1

• Makes provision for the establishment of the NCR.
• Ensures that consumers know what is included in their credit contracts.
• Ensures registrations of credit bureau and debt counselling services.
• Promotes the social and financial interest of consumers.
• Promote a fair but competitive credit market.

Question 2

7.2 Impact of the NCA on businesses

Answer 2

• Authorised credit providers may attract more customers.
• Low bad debts resulting in better cash flow.
• Protects businesses against non-paying consumers.
• Stamps out reckless lending and prevents businesses from bankruptcy.
• Increases cash sales as credit can only be granted to qualifying customers.

Question 3

7.3 Actions regarded as non-compliance by the NCA

Answer 3

• Charging different interest rates to customers based on gender/race.
• Not providing reasons for credit refusal.
• Refusing credit to customers based on gender or race.
• Blacklisting customers without making efforts to recover the debt.

Question 4

7.4 Penalties or consequences for non-compliance to the NCA

Answer 4

• The business may not charge any fee, interest or other charges under that specific credit agreement.
• The National Credit Regulator may impose a fine or penalty on the business for non-compliance.
• The business may not demand payment, sue, or attach the clients or consumers assets.
• The court may declare the granting of credit by the business reckless and may order the consumer not to repay the creditor.

Question 5

7.5 Ways in which businesses can comply with the NCA

Answer 5

• Disclose all costs of loan or no hidden costs should be changed or added.
• Credit providers must be registered with the National Credit Regulator
• Conduct affordability assessment to ensure the consumer can meet his or her obligations.
• Businesses must submit an annual compliance report to the National Credit Regulator.

Question 6

7.6 Rights of consumers according to the NCA

Answer 6

• Obtain reasons for credit being refused.
• Apply for credit and be free from discrimination.
• Receive pre-agreement documents before concluding any credit transaction.
• Apply for debt review or counselling if the consumer cannot afford to repay their debts.
• Fair and responsible marketing.
• Receive information in plain and understandable language.
• Return goods to the credit provider to settle the outstanding debt.
• Receive protection of their personal information.