This blog is co-authored by Zubenathi Ndlwana and Brigitte Eloff (Candidate Attorneys)
In April 2025, the Supreme Court of Appeal (SCA) highlighted the importance of credit providers being registered before concluding credit agreements and advertising credit.
The appellant, a pawn broking business, gave short-term loans to consumers and in return retained possession of their movable property as security. After receiving and investigating complaints about the appellant’s business activities, the National Credit Regulator brought an application to the National Credit Tribunal (NCT) alleging that the appellant had engaged in ‘prohibited conduct’ as defined in the National Credit Act, 2005 (NCA). It was alleged that the applicant had:
- concluded credit agreements and extended credit to consumers without being registered as a credit provider, in contravention of section 40 of the NCA, which provides for the compulsory registration of credit providers; and
- advertising the availability of credit while not being registered as a credit provider, in contravention of section 76 of the NCA, which prohibits unregistered credit providers from advertising credit services.
Following a finding by the NCT that the appellant had been guilty of prohibited conduct, the appellant appealed the decision in the High Court where again they were unsuccessful. The appellant then appealed the decision in the SCA.
In defending the allegation that they had breached section 40 of the NCA, the appellant claimed that section 42(3)(a) of the NCA permits unregistered credit providers to provide credit so long as they had applied for first time registration. The SCA disagreed with this defence and held that section 42(3)(a) did not apply to the appellants, as this section provides for instances where a credit provider, who was not previously registered or required to register, is then required to register because of a new threshold being prescribed, which was not the situation in this instance.
Regarding advertisements of credit, it was common cause that the appellant had advertised their services. The appellant again relied on section 42(3)(a) alleging that, on a proper interpretation of section 76, credit providers that are entitled to enter into credit agreements are permitted to advertise availability of credit. The SCA held that, aside from section 42(3)(a) not applying to the appellant, this argument was far-fetched as it would require the court to legislate what is permitted in terms of section 42(3)(a), as opposed to merely reading-in to section 76.
The SCA found that the appellant had breached the NCA as alleged and upheld the remedial orders made by the NCT. Firstly, it was declared that the credit agreements entered into by the credit provider were null and void. Credit agreements concluded by unregistered credit providers who are required to be registered are null and void. Secondly, it was ordered that the consumers in terms of the credit agreements be refunded what they had paid. Thirdly, the NCT’s discretionary imposition of an administrative penalty on the appellant in terms of section 151 of the NCA was found to be justified.
This judgment illustrates the importance of credit providers being registered with the National Credit Regulator. Failure to do so may result in credit agreements being void, the credit provider having to refund consumers and administrative penalties being imposed by the NCT.