TFG not fazed by NCR rul­ing

Club fees are deemed ir­reg­u­lar by reg­u­la­tor

The Star Early Edition - - BUSINESS REPORT - Di­neo Faku

THE NA­TIONAL Credit Reg­u­la­tor (NCR), has re­ferred TFG, whose brands in­clude Fos­chini, to the Na­tional Con­sumer Tri­bunal for breach­ing the Na­tional Credit Act (NCA) fol­low­ing an in­ves­ti­ga­tion that found it charged con­sumer club fees on credit ar­range­ments.

The NCR, which reg­u­lates the credit in­dus­try, said yes­ter­day that it wanted the tri­bunal to or­der TFG to re­fund af­fected con­sumers the club fees charged and to com­pel the group to con­duct an in­de­pen­dent au­dit into its loan book to de­ter­mine the num­ber of con­sumers to be re­funded.

It said it also wanted the tri­bunal to in­ter­dict TFG from charg­ing con­sumers a club fee on credit agree­ments and to im­pose an ap­pro­pri­ate ad­min­is­tra­tive fine on Fos­chini.

NCR se­nior le­gal ad­vi­sor Nthu­pang Magolego said re­tail­ers were abus­ing the sys­tem.

“The club fee de­duc­tion from credit agree­ments is an easy way for re­tail­ers to make. We ex­pect TFG to op­pose the re­fer­ral, be­cause a lot of money is at stake,” she said.

Magolego said the NCR also wanted the tri­bunal to im­pose a 10 per­cent fine on TFG’s an­nual turnover for 2016 when the in­ves­ti­ga­tion was launched.

She said that the re­funds would be with ef­fect from 2007 when the NCA was made into law. “We are con­fi­dent of our case be­cause the tri­bunal rule in our favour in the Ed­con case and the com­pany has ap­pealed the tri­bunal rul­ing,” she said.

TFG con­firmed the re­fer­ral yes­ter­day, say­ing that it was be­cause the NCR viewed its Club and Su­perClub sub­scrip­tion prod­ucts as un­law­ful. It said it would be op­pos­ing the re­fer­ral, charg­ing that the coun­try’s big­gest fash­ion re­tail­ers such as Ed­con and Mr Price as well as fur­ni­ture store Lewis also sold such prod­ucts.

“TFG is of the view that its re­fer­ral is in­cor­rect, as the NCA does not limit which prod­ucts re­tail­ers may sell to its cus­tomers on their credit ac­counts. This was also re­cently con­firmed by the Na­tional Con­sumer Tri­bunal in the Lewis case. TFG will be op­pos­ing its re­fer­ral to the Na­tional Con­sumer Tri­bunal,” it said.

TFG, which has a mar­ket cap­i­tal­i­sa­tion of R30.89 bil­lion, said its club prod­ucts were op­tional with in­surance and other ben­e­fits which could be sub­scribed to at ap­pli­ca­tion stage, or later via tele­mar­ket­ing. It said the sub­scrip­tions could be can­celled by cus­tomers at any time with­out penalty.

Jac­que­line Peters, a man­ager in the NCR’s in­ves­ti­ga­tions and en­force­ment depart­ment, said that charg­ing a club fee on credit agree­ments was not per­mit­ted by the NCA.

“The NCA al­lows con­sumers to be given a quo­ta­tion which sets out the cost of credit be­fore sign­ing credit agree­ments. Con­sumers should re­quest this quo­ta­tion from their credit providers so that they can prop­erly check the cost of credit that is be­ing of­fered”, she said.

Chris Gil­mour, an in­de­pen­dent in­vest­ment an­a­lyst, said the NCR de­ci­sion would have lit­tle im­pact on the com­pany’s rep­u­ta­tion. He said that the com­pany would not be af­fected if it pre­sented its case to the NCR and the tri­bunal to say their in­tent was not to cir­cum­vent the law.

“Peo­ple who sign up for club cars are not both­ered about whether or not com­pa­nies ad­here to laws,” Gil­mour said. “They are look­ing for good deals.”

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