Environments [National Credit Act]

Question 1

NCA

Answer 1

provides guidelines to credit providers and credit applicants in terms of their rights and responsibilities

Question 2

Purpose of NCA

Answer 2

• prevents discrimination and ensures that credit is available to all consumers
• ensures that all credits providers and credit consumers are treated equally
• encourages responsible credit advancement/ lending
• regulates the interest rate that credit providers can charge

Question 3

National Credit Regulator (NCR)

Answer 3

educates consumers about their rights and ensures that the credit industry abides by new legislation

Question 4

Rights of Consumers

Answer 4

• to apply for credit and to be free from discrimination
• to be given reasons for credit being refused
• to be given documents before the credit transaction is completed
• to fair and responsible marketing

Question 4

Rights of Credit Providers

Answer 4

• the credit provider can issue a summons and apply for a sentence against the consumer
• if there is no debt review application, the credit provider can take legal action against the consumer, provided that: > the consumer has not paid for at least 20 days; and the credit provider has given the consumer written notice, by registered post, of at least 10 days; and the consumer has not reacted to it

Question 5

Responsibility of Credit Provider

Answer 5

• must be register as credit provider with the NCR
• the cost of the credit offered must be clear
• make sure the all interest and other monies levied are within the limits of the NCA

Question 6

Responsibility of consumers

Answer 6

• provide the correct, honest and complete information about income and debt
  -pay the dept on time

Question 7

Positive impact of NCA (credit providers/ business)

Answer 7

• reckless granting of loans is eliminated as a credit check must be done
• it protects the business abasing bad debts, resulting the better cash flow
• cash sales increase because businesses only grant credit to qualifying customers/more customers are buying cash

Question 8

Negative impact of NCA (credit providers/ business)

Answer 8

• more paperwork results in a administrative burden
• complex debt recovery procedures
• credit lent recklessly may not be recovered

Question 9

Positive impact of NCA (consumers)

Answer 9

• protects consumers against unjust credit practices
• protects consumers against receiving credit that they cannot pay back
• protects consumers by limiting trading hours for direct sales

Question 10

Negative impact NCA (consumers)

Answer 10

• consumers who appear on the blacklist cannot get access to credit
• refusal of credit may lead to a lowering of the standard of living
• consumers with a lot of debt may be exploited by micro-lenders

Question 11

Compliance with NCA

Answer 11

• the national credit tribunal can levy fines
• credit providers who do not comply with the Act can lose the money they lent to the consumer