In May 2025, the High Court found that a bundled credit life insurance product contravened the National Credit Act of 2005 by providing cover to policyholders who could not benefit from the cover offered. The credit life product included disability and retrenchment cover which the credit provider sold largely to pensioners, and to disabled persons and consumers receiving social grants. The court found that the credit provider repeatedly contravened various sections of the National Credit Act and referred the matter to the National Consumer Tribunal to determine an appropriate administrative penalty for the contraventions.
Consumers purchasing household goods and furniture at retail stores on credit were required to purchase credit insurance and were offered the credit insurance product of the credit provider or were required to obtain their own credit insurance. If the product of the credit provider was selected, the consumer was “obliged to take the full package, including cover for retrenchment and disability.” A direct comparison was drawn between a young consumer who would benefit to the full extent from the cover, against a pensioner or disabled person who could never claim under those respective categories of cover. The court found that a disabled person “logically would not agree to pay for such cover” nor was it likely that a pensioner on a small grant would knowingly agree to pay for a service of no value to them.
Section 106 of the National Credit Act prohibits credit providers from offering or demanding that consumers purchase or maintain insurance that is “unreasonable or at an unreasonable cost to the consumer, having regard to the actual risk and liabilities involved in the credit agreement.” The court found that a consumer who had decided what they needed, where to purchase their goods, and concluded the agreements of purchase were unlikely to have the time “to even consider the details of the contract in regard to a “limited right to claim.” Despite the fact that the product was designed on a group basis and that the product was supposedly cheap, the court found that the product was unfair to the individual consumers, that the credit provider bore no risk regarding pensioners’ claims for retrenchment nor for disability claims by disabled persons, and was unreasonable in relation to the process for lodging claims that pensioner and disabled consumers could not comply with.