The new regulations prescribing the maximum rates of interest, initiation fees and service fees that credit providers can charge come into effect on 6 May 2016.
An urgent application by Micro Finance South Africa (MFSA) to stay the implementation of the new regulations pending the outcome of an application to set aside the Minister of Trade and Industry’s decision to enact the new regulations has failed.
In a judgment delivered on 5 May 2016, the court weighed up the harm that members of MFSA would allegedly suffer if the interim interdict was not granted against the harm that the Minister, the National Credit Regulator, other credit providers and consumers would bear if the interdict was granted. The court was not satisfied that the credit providers had proved that the regulations would result in the demise of any of their members and refused to grant an interim interdict. The balance of convenience did not favour granting the interim interdict.
This case is another indication that our courts will only grant temporary restraining orders against the government’s exercise of statutory power in the clearest of cases, because the separation of powers doctrine is a vital tenet of our constitutional democracy.
The MFSA can still pursue their application to set aside the regulations but not on an urgent basis. In the meantime, the regulations will remain in force.