Sho­prite fined for reck­less lend­ing

Business Day - - FRONT PAGE - Katharine Child Re­tail Writer [email protected]­nesslive.co.za

Re­tail gi­ant Sho­prite was fined R1m by the Na­tional Con­sumer Tri­bunal for breach­ing the Na­tional Credit Act af­ter it was found to have lent reck­lessly to vul­ner­a­ble con­sumers. The judg­ment was handed down in the high court in Pre­to­ria on De­cem­ber 18 and pub­li­cised on Tues­day by the Na­tional Credit Reg­u­la­tor.

Re­tail gi­ant Sho­prite was fined R1m by the Na­tional Con­sumer Tri­bunal for breach­ing the credit act af­ter it was found to have lent reck­lessly to vul­ner­a­ble con­sumers.

The judg­ment was handed down in the Pre­to­ria high court on De­cem­ber 18 and pub­li­cised on Tues­day by the Na­tional Credit Reg­u­la­tor.

The reg­u­la­tor in­ves­ti­gated Sho­prite’s lend­ing prac­tices in 2014 af­ter me­dia re­ports of re­tail­ers lend­ing to peo­ple who could not af­ford debt.

The mat­ter was re­ferred to the tri­bunal, which found against the re­tailer in 2017.

But Sho­prite ap­pealed in the high court against the tri­bunal’s rul­ing on tech­ni­cal grounds.

On Tues­day, Sho­prite said it noted the judg­ment and had al­ready “pro­cessed the pay­ment of the fine ... for ex­tend­ing credit to some of its cus­tomers too eas­ily”.

A judg­ment penned by Judge Nomonde Mngqibisa-Thusi de­tailed ex­am­ples of how Sho­prite ex­tended credit to con­sumers whose monthly debt re­pay­ments ex­ceeded their salaries.

One con­sumer had monthly debt of R9,888 af­ter pay day and his loan from Sho­prite in­creased that to R10,113.77.

Sho­prite said that it had been taken into ac­count in ap­prov­ing the loan that he was mar­ried and his wife could as­sist. How­ever, the court ruled that the “as­sump­tion that the spouse will stand in is spec­u­la­tive to say the least”.

In an­other case, a pen­sioner named only as Pot­gi­eter had no monthly dis­pos­able in­come and debt of R810.65 be­fore ap­ply­ing for the loan. Sho­prite granted her credit.

Pot­gi­eter de­faulted, and Sho­prite re­pos­sessed goods from her, but she was still in ar­rears of R3,977.66, which the court said “Sho­prite de­manded”.

The court found Sho­prite had “read­justed” con­sumers’ fi­nan­cial in­for­ma­tion to show they could af­ford debt when it was clear they could not.

The high court found it “as­ton­ish­ing” that even af­ter “ad­just­ing” cus­tomers’ data, con­sumers “still had neg­a­tive af­ford­abil­ity fig­ures” yet Sho­prite granted them credit.

Sho­prite was also or­dered to pro­vide debt coun­selling and pay­ment re­struc­tur­ing to vul­ner­a­ble debtors.

The group said in a state­ment that the “mat­ter re­lates to credit agree­ments con­cluded in June 2013 and June 2014 with nine con­sumers from among thou­sands”.

Sho­prite said that all nine paid their debt in full, and its af­ford­abil­ity as­sess­ment pro­cesses had been re­placed in Septem­ber 2015 with a new sys­tem aligned with the Na­tional Credit Amendment Act.

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