Credit consumers in South Africa are protected!

The National Credit Act declares certain credit agreements unlawful and clearly spells out the consequences for credit providers who overstep the mark. If you have a credit agreement with a credit provider and you feel like they might have taken a chance at application stage, check out these definitions for some clarity on the matter.

Your credit agreement is deemed unlawful if:

• It was entered into with an unemancipated minor unassisted by a guardian. That is just legal talk for any minor who can’t make decisions unless supervised by their parent (or guardian). In a nutshell, credit providers can’t sell to kids.
• It was entered into with a person declared mentally unfit by a competent court. No need to clear anything up here.
• It was entered into with a person subject to an administration order. If you are under “administration” it means a court has already declared you “unable to meet your financial obligations”. It makes logical sense then that a credit provider can’t provide you with additional credit at this stage.
• If it was entered into as a result from negative option marketing. Negative option marketing is when a marketer fails to get your consent before signing you up (billing or charging) or if the material is completely misleading.
• If it contains unlawful provisions.
• If it was entered into with an unregistered credit provider
• If it was entered into with a credit provider who has received a notice from the NCR ordering them to stop engaging in the granting of credit.

Just something worth considering at this stage. While the Act looks to protect consumers and come down hard on credit providers, who aren’t playing ball, it’s obvious that if a consumer doesn’t offer up all the relevant information at application stage, the credit provider cannot be held responsible.

All the agreements listed above will not be deemed unlawful if the person applying for credit withheld information or tried to obscure facts.

Ok, if that’s out of the way, let’s proceed.

What are the consequences of unlawful credit agreements?

As a consumer, what can you expect to happen?

A South African court must make a just and equitable order and find that the credit agreement is void from the date of the agreement.

That’s a pretty stiff result for a credit provider who oversteps the mark. But let’s be fair here – If it can be proven that a credit provider purposefully took advantage of an unwitting consumer and pushed through an application that they knew was unlawful, surely the consumer gets to bail out of that agreement unscathed?

The SA Debt Advisors Team