High court rules in favour of Lewis on its club fees
Regulators appeal turned down as firm did not breach Act
THE high court has turned down the National Credit Regulator’s (NCR) appeal of a decision that club fees and extended warranties sold by Lewis Stores were not a contravention of the National Credit Act.
The National Consumer Tribunal made the earlier decision in 2017.
This is the second court ruling in as many months to go against the NCR.
In what was regarded as a major blow to the regulator in March, the court set aside the controversial income verification requirements contained in the regulations of the act.
On Monday, the high court handed down judgment in favour of Lewis.
The furniture retailer mainly sells to lower-income groups on in-store credit.
The high court dismissed the appeal and handed down a costs order against the NCR.
The Lewis share price was marginally weaker on Monday, closing at R46.95, but the high court judgment is expected to boost its recent strengthening.
The share price dropped from a record high of R100 in June 2015 to a low of R23.67 in January 2018 because of concerns about Lewis’s lending model and fears of a tougher credit regulatory environment.
Monday’s court ruling involves a matter that dates back to 2016, when the NCR referred Lewis to the tribunal for allegedly contravening the act.
In June 2017 the tribunal ruled in Lewis’s favour.
The tribunal found that the furniture retailer’s club fees and extended warranties did not contravene the act.
The tribunal had previously found that Edcon’s club fees did contravene the act.
However, the tribunal found that the act did not prevent credit providers from offering the services of a club to consumers, provided the services were not part of the cost of credit.
The tribunal found that the club fees charged by Lewis were not part of the cost of credit.
The tribunal also found that the act allows Lewis to include the cost of an extended warranty as part of its fees and charges even if warranties were provided by the manufacturers. The tribunal cleared Lewis of the wrongdoing alleged by the regulator.