Credit regulator cracks down on errant lenders
The National Credit Regulator (NCR) swept into Nelspruit, Witbank, Middelburg and Barberton this week raiding the premises of 37 credit providers, where it found stashes of identity documents, bank cards, passports, drivers’ licences and cellphones belonging to consumers and being held as surety by lenders.
Nomsa Motshegare, the chief executive of the NCR, says nine criminal cases have been opened. “We uncovered illegal garnishee orders and unlawful credit agreements, and found cases of reckless lending and excessive fees and interest charges. Three credit providers that are required to be registered were found to be unregistered.”
This week the NCR also issued an errant lender with a compliance notice and last week cancelled the registration of another.
The NCR served a compliance notice on Thaba Selemo Financial Services CC, a credit provider in Tzaneen, for charging illegal fees and for other breaches of the National Credit Act.
A compliance notice is an instruction to comply with the Act.
Thaba Selemo Financial Services contravened the Act by charging consumers illegal fees and inducing them to – or requiring that they – enter into supplementary agreements or sign documents that contain provisions that would be unlawful if they were included in a credit agreement.
The credit provider required consumers to enter into an agreement to pay a fee to NuPayment Solutions, a company that processes financial transactions in the micro-lending industry. The fee charged was not a permissible fee, commission or expense under a credit agreement and exceeded the maximum service fee of R50.
In terms of the compliance notice, Thaba Selemo Financial Services is required to:
◆ With immediate effect cease requiring consumers to pay NuPayment Solutions a service provider fee and charging service fees in excess of the maximum prescribed service fee;
◆ Within 30 business days reimburse all consumers who have been charged the service provider fees and service fees in excess of the maximum prescribed fee;
◆ Within 45 business days furnish the NCR with a sworn affidavit confirming the refunds to the affected consumers along with a list of the names of the consumers refunded and the amounts refunded; and
◆ Have its auditor submit an assurance certificate to the NCR.
“Credit providers should be warned: the NCR will not condone any contraventions by lenders,” Motshegare says.
Last week, the regulator cancelled the registration of Rufus Alfonso Financial Consultants CC, a credit provider in Marikana in the North West Province.
The NCR found that the provider had granted credit to consumers recklessly, charged consumers interest in excess of the maximum prescribed rate and retained consumers’ bank cards, identity documents and pin codes.
The National Consumer Tribunal ordered the cancellation of the credit provider’s registration with immediate effect, and that it refund consumers all interest charged in excess of the prescribed maximum rate.
The regulator is calling on the tribunal to impose a fine of R1 million on Rufus Alfonso, says Lesiba Mashapa, the company secretary at the NCR.
“Reckless lending is rampant in many parts of the country. There is clearly a need for the NCR to finalise the affordability assessment guidelines for publication soon,” Mashapa says.