Picture: FINANCIAL MAIL
Picture: FINANCIAL MAIL

THE National Credit Regulator (NCR) last week referred 13 small credit providers to the National Consumer Tribunal for various breaches of the National Credit Act. This is part of a crackdown on offenders.

The referrals follow the NCR’s investigations into microlenders, which revealed reckless extension of credit; failure to provide pre-agreement quotations; the charging of interest in excess of the prescribed maximum rates; overcharging of service fees; and the unlawful retention of pension cards, bank cards, identity documents and personal identity numbers of clients as surety.

The failure to keep records was another shortcoming.

"The NCR is intensifying its effort to detect reckless lending and the retention of consumer bank cards and identity documents," NCR manager of investigations and enforcement Jacqueline Boucher said. "The NCR will continue to conduct industry-wide investigations to root out breaches of the National Credit Act and abuse of vulnerable consumers."

The regulator has asked the tribunal to order the entities to refund the affected consumers; interdict the credit providers from continuing with their unlawful conduct; and/or impose an appropriate administrative fine.

Large retailers have also been picked up by the radar of the NCR. These include furniture retailer Lewis Stores, which agreed to refund R67m to consumers, retailer JD Group, Finbond Mutual Bank and Shoprite Investments.

Clothing, footwear and textiles retailer Edcon was investigated for charging customers club fees in credit agreements in contravention of the National Credit Act.

Ms Boucher said the proposed lowering of the threshold for the registration of credit providers would assist in the fight against unlawful practices as it would make compliance monitoring possible.

The Department of Trade and Industry’s director for credit law and policy, Siphamandla Kumkani, said in Parliament recently that draft regulations relating to the registration and registration fees for credit providers had been approved by Trade and Industry Minister Rob Davies and would be gazetted for public comment shortly. The aim was to get small and informal credit providers registered, thereby weeding out unscrupulous operators.

The initiative to tighten laws around credit extension follows a Cabinet decision that the trade and industry and justice departments and the Treasury tackle household overindebtedness.

A task team was set up to look into reckless lending, credit insurance affordability, cost of credit, judgments and garnishee orders, disclosure of information and claims, and collections for prescribed debts.