This blog was co-authored by Boitumelo Phillips, Candidate Attorney.

In March 2025, the High Court found that an acknowledgment of debt signed by a financial adviser agreeing to pay an insurer clawed-back commission was not a credit agreement governed by the National Credit Act (NCA).

The respondent financial advisor, signed an acknowledgment of debt in May 2010, agreeing to repay a life insurer commission advances that had been clawed back due to policy lapses. The respondent later contested the validity of the acknowledgment of debt, arguing that it was subject to the NCA and that the life insurer had failed to comply with the NCA’s requirements, including registration as a credit provider and assessment of over-indebtedness.

The court’s analysis of the acknowledgment of debt focused on the nature of the agreement and its classification under the NCA. The court noted that the acknowledgment of debt was a result of the respondent’s obligation to repay unearned commission advances, which did not constitute a credit agreement as defined by the NCA. The court emphasised that the NCA primarily governs credit agreements where there is an extension of credit by a credit provider to a consumer. In this case, the acknowledgment of debt was a settlement of an existing obligation rather than an extension of new credit.

In light of these findings, the court held that the acknowledgment of debt was valid and enforceable, and the appellant life insurer was entitled to recover the amount specified in the agreement.

This case underscores the importance of understanding the legal distinctions between different types of agreements and their applicability under the NCA. Not all acknowledgments of debt fall under the NCA’s purview, and the courts will consider the nature of the agreement before applying the NCA’s provisions. Legal practitioners must ensure that they carefully draft agreements and understand the relevant legal frameworks to avoid unnecessary disputes and ensure enforceability.

Momentum Metropolitan Life Limited v Lakhoo [2025] ZAKZPHC 12