Tag archives: National Credit Act

Prescribed rate of interest is 11.75% from 1 July 2023

By Patrick Bracher (ZA) on June 28, 2023 Posted in Finance

This blog was co-authored with Michael McCarthy, Candidate Attorney. The prescribed rate of interest is 11.75% per annum with effect from 1 July 2023. The previous rate was 11.25% per annum. According to the Prescribed Rate of Interest Act, interest on debts where no rate is prescribed is calculated at the repo rate plus 3.5%. … Continue reading

Club fees lawful under National Credit Act

By Patrick Bracher (ZA) on March 11, 2020 Posted in General

The respondent furniture retailer in The National Credit Regulator v Lewis Stores (Pty) Ltd offered club membership to its customers including its credit agreement customers which afforded certain benefits to the club members including the chance to win attractive prizes. Club membership is open to any person whether a credit customer or not, and the … Continue reading

Arm’s length acknowledgement of debt is an NCA credit agreement

By Patrick Bracher (ZA) on February 16, 2020 Posted in General

An acknowledgement of debt relating to a loan from one friend to another for a capital amount of R831 000 and interest at 18% per year was held to be a credit agreement for the purposes of the National Credit Act. The agreement identified the capital, the interest at 18%, deferred payments, collection fees to be … Continue reading

Jurisdiction of the National Consumer Tribunal

By Patrick Bracher (ZA) on January 22, 2020 Posted in General

The Supreme Court of Appeal discussed, without deciding, the jurisdiction of the National Consumer Tribunal to deal with matters arising under sections 90 and 91 of the National Credit Act relating to the declaration of a provision as unlawful in terms of section 90(2) and void. It appears from section 164(1) that no unlawful provision, … Continue reading

Section 129 National Credit Act notice must state the amount in arrears

By Patrick Bracher (ZA) on January 20, 2020 Posted in General

Section 129 of the National Credit Act requires the creditor to specify the default including the actual amount of the arrears. The requirement for ‘drawing the default to the attention of the consumer’ means more than just the fact that the consumer is ‘in default’. Section 130(4) gives the debtor an opportunity to remedy the … Continue reading

Incomplete or inaccurate record of agreement does not make it void (NCA extended warranties in issue)

By Patrick Bracher (ZA) on January 14, 2020 Posted in General

The Supreme Court of Appeal upheld the validity of extended warranties in respect of goods sold on credit under the National Credit Act 2005 despite the fact that the warranties were filled in incompletely or inaccurately. The evidence was that, despite the inaccuracies, the extended warranties were correctly applied and gave extended warranty cover for … Continue reading

Judicial oversight of execution against property requires full facts before court

By Riccardo Petersen (ZA) and Vishana Makan on July 3, 2019 Posted in Banking

Where an order was sought declaring immovable property specially executable but no facts had been placed before the court by the defendant, the court authorised the sale. The court held that to deny an order declaring a property specially executable where the summons clearly draws a debtor’s attention to their right to lead evidence and … Continue reading

A settlement agreement is not governed by the National Credit Act if the underlying dispute is not

By Riccardo Petersen (ZA) on April 4, 2019 Posted in General

The Supreme Court of Appeal found that if the underlying cause of a settlement does not fall within the parameters of the National Credit Act (NCA), then the settlement agreement cannot logically be converted to a credit agreement under the NCA. The underlying cause (in this case the rental agreement) is of vital significance because … Continue reading

Appeal court reluctantly finds a once-off loan requires registration as credit provider

By Riccardo Petersen (ZA) on October 3, 2018 Posted in General

The appeal court has found that the requirement to register as a credit provider is applicable to all credit agreements once the prescribed threshold is reached (currently zero), irrespective of whether the credit provider is involved in the credit industry and irrespective of whether the credit agreement is a once-off transaction. The appeal court reluctantly … Continue reading

Section 126B(1)(b) of the National Credit Act is not retrospective

By Patrick Bracher (ZA) on February 13, 2017 Posted in General

Section 126B which prohibits dealing in a debt under a credit agreement extinguished by prescription, and allows the consumer to raise the defence of prescription (even though the consumer agreed to revive a prescribed debt without being aware of the prescription defence) came into force on 13 March 2015. Before section 126B was enacted an agreement … Continue reading

Constitutional Court declares that emolument attachment orders need court consent

By Riccardo Petersen (ZA) on September 20, 2016 Posted in General

In our blogs from July 2015 and August 2015 we dealt with the High Court’s judgment declaring certain aspects of the long-established but often abused debt collecting process of emolument attachment orders unlawful. On 13 September 2016, the Constitutional Court confirmed that changes must be effected to section 65J (2)(a) and (b) of the Magistrates … Continue reading

Registration as credit provider – Final determination threshold set at zero

By Riccardo Petersen (ZA) on June 7, 2016 Posted in General

On 11 May 2016, the Department of Trade and Industry announced in Government Gazette 39981 that the new credit provider registration threshold will be Nil (R0). Is the threshold rational and reasonable? If the threshold is not rational, credit providers whose credit agreements are to be declared void may be able to challenge the threshold. … Continue reading

Extra-territorial application of NCA to offshore credit agreements

By Riccardo Petersen (ZA) on May 25, 2016 Posted in Banking

A settlement agreement concluded outside South Africa between a foreign company and a person resident in the United Kingdom that was concluded completely outside the South African credit market and has no bearing on accessibility to credit by South Africans or the nature of credit products available within South Africa does not “have an effect … Continue reading

New NCA regulations prescribing maximum interest rates and service and initiation fees come into force as court application fails

By Aslam Moosajee (ZA) on May 5, 2016 Posted in Banking

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 … Continue reading

A consumer who gets a section 129 notice cannot rely on fanciful technical points

By Aslam Moosajee (ZA) on March 10, 2016 Posted in Banking

The purpose of s129 of the National Credit Act (NCA) is to ensure that a consumer is notified of the default and of the various options available to the consumer. In Sebola v Standard Bank the Constitutional Court held that a credit provider can normally show compliance with s129 by: proving that the notice was sent … Continue reading

Many refunds for force-placed insurance

By Patrick Bracher (ZA) on February 23, 2016 Posted in Insurance

There have been a number of cases internationally where financial institutions have been obliged to refund policyholders for imposing force-placed insurance deals at the time of contracting for financial services. Under the National Credit Act in South Africa, credit insurance must not be unreasonable nor at an unreasonable price and this is a good test … Continue reading

National Credit Act salary attachment procedure revisited

By André Vos and Riccardo Petersen (ZA) on August 6, 2015 Posted in Banking

In early July 2015 the High Court declared aspects of a long-established but often abused debt collecting process unlawful, with potential wide-ranging consequences. It could render hundreds of thousands of salary attachment orders unenforceable. In our recent blog post we highlighted the findings of what is known as the Desai Judgment (after the judge who … Continue reading

Comment on the draft regulations limiting interest and fees under the NCA

By Riccardo Petersen (ZA) on July 1, 2015 Posted in Banking

The Minister published the draft regulations on the review of the limitations of fees and interest rates on 25 June 2015. The regulations will increase and decrease interest rates and fees that credit providers can levy on consumers’ mortgage agreements, credit cards, store cards and unsecured credit transactions. The proposed changes to the interest rates … Continue reading

Credit providers who overcharge may have to repay consumers

By Riccardo Petersen (ZA) on February 11, 2015 Posted in General

The National Credit Act (NCA) sets out the maximum service fees allowed in credit agreements. The supreme court of appeal in Barko Financial Services v National Credit Regulator confirmed the National Consumer Tribunal’s power to order reimbursement by credit providers to consumers for service fees paid in excess of the statutory limits. The extra fee … Continue reading

National Credit Act: Creditor can take judgment if consumer defaults under debt re-arrangement

By Riccardo Petersen (ZA) on December 2, 2014 Posted in Banking

The appeal court has reaffirmed that a credit provider can proceed and take judgment against a consumer who defaults on any obligation under a debt re-arrangement that was agreed between the consumer and the credit provider or ordered by a court. That is the plain meaning of section 88(3) of the National Credit Act (NCA). … Continue reading

NCA summons interrupts prescription despite no section 129 notice

By Patrick Bracher (ZA) on July 21, 2014 Posted in Banking

The bank failed to give notice to the defaulting consumer under section 129 of the National Credit Act before issuing summons against the consumer. By the time it gave notice with the consent of the court, three years had passed since the debt became due. The consumer alleged that the debt had prescribed. The court found … Continue reading

Nature of a cheque transaction

By Patrick Bracher (ZA) on June 4, 2014 Posted in Banking

A cheque is a contract in writing that enjoys the characteristic of negotiability but it must be founded on a reasonable cause in order to be valid and enforceable. If the underlying transaction for which the cheque was given is voidable, illegal or is not performed, a claim by the payee for enforcement of the … Continue reading

The scheme of the National Credit Act

By Patrick Bracher (ZA) on May 27, 2014 Posted in Banking

Certainty in regard to the cost of the proposed credit is imperative. Common to all forms of a credit agreement for the purposes of the National Credit Act is the requirement of payment of a charge, fee or interest in return for granting credit. This covers any consideration or payment made by a consumer to … Continue reading

Loan repayable by cheque with profit share is not NCA credit agreement

By Patrick Bracher (ZA) on May 19, 2014 Posted in Banking

The borrower of money gave a lender a set of cheques to use to repay loans made to purchase and resell medical equipment and a sectional title unit. A number of cheques were handed over at the beginning of the transaction. The amounts and dates on the cheques would be inserted by the lender when … Continue reading