National Credit Act

6 May 2007
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Just some word of advice, If you want credit GET IT NOW, after the 1st June everything is going to change, apparently if you get a credit card after 1st June you are looking at an interest rate of 27% and as you go along they bank will reduce your interest rate depending on how you conduct your account.

So if Vodacom phones and offers you a pre-approved credit card ... .... ... take it !!!
SA consumers find safety in new credit act June 2, 2006

By Charlene Clayton

The most far-reaching consumer legislation in years became effective this week. The National Credit Act sets a framework for every type of credit transaction, from microloans to homeloans, from overdrafts to furniture finance. We report on when other protection measures take effect.

Consumers, credit bureaus and providers of credit ranging from microlenders to banks all need to get to grips with new National Credit Act, which became effective on Thursday this week.

The Act introduces new rights for consumers, as well as measures that allow consumers to make informed decisions before buying goods and services on credit.
It also places a greater responsibility on credit providers to refuse to give you credit if you cannot afford it and, for the first time in South African history, it will regulate the way credit bureaus do business.

The new National Credit Act replaces the Usury Act (which governs moneylending transactions), the Credit Agreements Act (which has governed instalment sale or "hire purchase" agreements) and the Exemption Notice to the Usury Act, under which microlenders have been making loans and which has exempted the microlenders from the interest rate cap imposed on banks.

A new regulator, called the National Credit Regulator, also came into being on Thursday.

This a body that will enforce the Act, monitor market trends and advise the Minister of Trade and Industry on matters of national policy relating to consumer credit.

The new regulator will also educate consumers about their rights.

Gabriel Davel, the chief executive of the now disbanded Micro Finance Regulatory Council, has been appointed as the chief executive of the newly created National Credit Regulator.

Davel says that some provisions of the old acts will still apply until all the sections of the new National Credit Act come into effect.

In practice, this means that banks must still adhere to the maximum rates defined under the Usury Act, microlenders must still meet all the requirements for disclosure to borrowers as required under the Usury Exemption Notice, and the provisions of the Credit Agreements Act will continue to apply.

New regulations
Regulations under the National Credit Act which will specify maximum interest rates and transaction fees that can be charged on credit agreements or loans are still being finalised. These maximums will only be implemented in June next year.

However, all the old Acts now fall under the authority of the National Credit Regulator and if you, as the consumer, find that a microlender, bank or other credit provider is flouting the provisions of the old Acts, you can complaint to the National Credit Regulator.

However, you can continue to take your complaints to the Ombudsman for Banking Services, the Credit Information Ombud and to the consumer desks that fall under the Department of Economic Affairs in each province.

The Micro Finance Regulatory Council's complaint line will also continue to operate for the time being, Davel says.

Another provision of the Act which became applicable from the beginning of this month is that all credit providers and credit bureaus must register with the National Credit Regulator within 40 working days from June 1, 2006.

A national database of credit agreements is being set up and will be maintained by the National Credit Regulator who will receive information about credit agreements from the credit providers and credit bureaus.

The idea behind the national credit register is that all your outstanding loan and other credit obligations will be listed on the register.

Prospective credit providers can check this database to assess whether you can afford to take on more debt before giving you a loan or extending credit to you.

Future provisions
Some of the more significant provisions of the National Credit Act that will come into effect on September 1, 2006, include:

The establishment of the National Consumer Tribunal, which will hear complaints from consumers about credit agreements and credit providers and will make orders regarding any conduct prohibited by the National Credit Act.
The right of consumers to access and to challenge information held about them at credit bureaus.

The new Act will give you the right to check your record held by a credit bureau once every year and you may not be charged a fee for doing so.

You will be able to challenge any inaccurate information about you on credit bureau records or on the national credit register.

The credit bureau and the National Credit Regulator will be obliged to investigate the accuracy of the information that you challenge without any charge to you.
An obligation on credit bureaus to take reasonable steps to verify the accuracy of any consumer credit information that is reported to it by credit providers.
The protection of confidential information of consumers held by credit bureaus and credit providers and the National Credit Regulator.

The Act states that your personal information may only be used for a legal purpose and it may only be released or reported to others under specific circumstances.

These circumstances include if there is a court order or an order of the National Consumer Tribunal which orders the release of your information to somebody else or if it is on your instruction.

In the final phase of implementation of the new Act on June 1, 2007, all the remaining provisions of the Act come into effect.

The final provisions of the Act include new and improved rights for consumers, the regulation of credit marketing practices, the introduction of pre-agreement disclosures and mechanisms for consumers who are unable to pay off their debts.

Consumer rights
Some of the more significant rights that you will enjoy as a consumer include the right to:

Apply for credit
Be protected against discrimination in the granting of credit.
Be informed of the reason why your application for credit is refused, if you ask for a reason.
Receive a credit agreement in plain and understandable language, and also
Receive a copy of your credit contract and a replacement copy when you request one.

Credit marketing practices
As from June next year, negative option marketing (in which you are sold a product or service unless you specifically contact the provider to say you don't want the goods and services) will be outlawed.

A credit provider may not harass you into entering a credit agreement, nor may a credit provider enter into a credit agreement with you after cold calling on you at your home.

The new Act also requires that interest rates and other costs must be spelt out in any advertisements in a format that is prescribed by the National Credit Regulator.

Pre-agreement disclosures
The Act requires - and this provision comes into effect from June 1, 2007 - that you are given quotation documents on any proposed credit transaction that are valid for five working days. This document must be set out in a format prescribed by the National Credit Regulator, and must spell out the interest rates and other costs that will apply should you enter into that particular agreement.

Davel says the form must make very clear what the credit agreement will cost you. The purpose of the pre-agreement disclosure document is so that you can shop around for the best deal before signing.
reckless credit

The Act aims to stamp out reckless lending and predatory practices. You are considered as having too much debt (being overindebted) if it is unlikely that you will be able to meet all your debit obligations timeously.

The reckless granting of credit is prohibited under the Act.
Reckless credit is when a credit provider gives you a loan or other credit without assessing whether you can repay the loan and even if you do not understand or appreciate the risks, costs or obligations under the credit agreement or if the granting of the credit leads to you becoming overindebted.

The new Act also allows consumers to apply to a debt counsellor to have their debts restructured if they have taken on too much debt.

If the debt counsellor finds that you are over-indebted then he or she can recommend to a Magistrate's Court that your debts be restructured to suit you and then your creditors.

Davel emphasises that it is no good asking for your debt to be restructured if you live beyond your means. The consumer must also take responsibility for their finances, he says.

Three-phase Act
The National Credit Act will be implemented in three stages:

Most of the Act's administration provisions came into effect on Thursday (June 1);
On September 1, the National Consumer Tribunal will come into force, as will measures to protect you against unfair practices by credit bureaus;
The new and improved consumer rights will come into force on June 1, 2007.

Three-phase Act
The National Credit Act will be implemented in three stages:

Most of the Act's administration provisions came into effect on Thursday (June 1);
On September 1, the National Consumer Tribunal will come into force, as will measures to protect you against unfair practices by credit bureaus;
The new and improved consumer rights will come into force on June 1, 2007.
Thanks for the link Alan,

Nedbank phoned me last week offering me a personal loan from R 4000 to R 100 000, I just laughed at them and droped the call.
This act is going to have far reaching effects, one of the things i find interesting is if you have assets of over 1bar, then you wont be subject to the scrutiny and then apply for credit as normal.
Thanks for the link, Alan. I've got to say interest in our NCA section has really hotted up as 1st June approaches.

But I don't know why you folks are worried - Haven't you got to be a millionaire to have a marine aquarium?
But I don't know why you folks are worried - Haven't you got to be a millionaire to have a marine aquarium?

:lol: No just 5 credit cards :razz:

IMO, the act will protect a lot of consumers against foolish debt. It's a good thing in general for the general public. I'm sure retailers and banks are not so chuffed about it.
my bank upped my credit card limit about a week ago :thumbup: they normally do it a month or two before xmas, xmas came early this year :lol:
I've heard this act will affect getting a cellphone etc? Anyone know if that's true?
hmmm, funny you mention that, I phoned about 2 weeks ago to find out when I can upgrade one of my cell contracts, I was told 5 months, I got a phonecall today saying I must please go into MTN tomorrow morning to upgrade my phone, he said he will phone me again tomorrow morning to remind me to go do the upgrade, actually sounded pretty desperate, think they'll even send me a taxi to take me there :lol:
dude, last week I got a Nokia 6234, pretty nice phone, today I got a Samsung E250, kak phone, gave it to my daughter, now tomorrow I gotta go get another one, eish :(
I'm thinking E65...

Viper get a 2110 your age type phone
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