Credit reg­u­la­tor cracks down on er­rant lenders

Weekend Argus (Saturday Edition) - - PERSONALFINANCE - AN­GELIQUE ARDÉ

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.

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