Extending credit is reckless
WITH the current lockdown, my wife has been on unpaid leave. And most probably might not have a job when this is over. She might get something out from UIF. However, it will be a drop in the ocean and when it will pay out no one knows.
We sent a request to our bank through their Covid-19 process and instead of activating the credit life insurance, to cover the loss of income, they have now replied with an option for another loan, to cover the next three months of payments, payable over and extended period with no service fees, at prime interest rate. I gather they will be once again charging credit protection insurance for this loan as well.
To me this would seem like they are trying to avoid getting the credit protection insurance from paying out now, when the customer has no income. Their hope is that the customers will be back in work before the three-month period is up and they will just go back to paying their old loan and new loan (reduced a cost). And now paying credit protection insurance on another loan.
To me this feels like reckless lending, as they are giving new loans to persons who technically have no income. A number of people are going to end up having no jobs or income by the end of April as well.
They are committing fraud.
Georgie: For complaints about the banking sector, contact the Banking Ombudsman. The Credit Ombudsman, which resolves disputes between consumers and the credit bureaus and non-bank credit providers, advises though that its office is able to assist with reckless credit disputes against its subscribing members. Avitha Nofal, senior legal adviser at the ombud, says: “With the amendments to the National Credit Act, the National Consumer Tribunal (NCT) is empowered to make findings of reckless lending. Credit providers and debt counsellors are required to report suspected reckless credit. Should they fail to do so, the Tribunal may impose administrative fines on them.
Consumers can contact the office of the Credit Ombud for free assistance if they experience any issues relating to credit agreements with non-bank credit providersor general complaints about their credit bureau listings. During these challenging times, should consumers wish to log new disputes, provided they have followed the regulated process of allowing the credit bureau or credit provider the required 20 working days to resolve the matter, consumers may… do so on our website www.creditombud.org.za”