National Credit Regulator

National Credit Regulator (NCR) (known in South Africa) as the NCR and was established as the regulator under the National Credit Act 34 of 2005 (the Act). The NCR is responsible for the regulation of the South African credit industry. It is tasked with carrying out education, research, policy development, registration of industry participants, investigation of complaints, and ensuring enforcement of the Act. The Act requires the Regulator to promote the development of an accessible credit market, particularly to address the needs of historically disadvantaged persons, low income persons, and remote, isolated or low density communities. The NCR is also tasked with the registration of credit providers, credit bureau and debt counsellors; and enforcement of compliance with the Act. It is active in promoting financial inclusion policy and a member of the Alliance for Financial Inclusion.^[1]

The role of the National Credit Regulator

The National Credit Regulator has to

• Register credit providers, credit bureau and debt counsellors, and monitor the conduct of these parties;
• Educate and create awareness of the protection which the Act offers;
• Research the credit market and monitor access to credit and the cost of credit to identify factors that may undermine access to credit, competitiveness and consumer protection;
• Advise government on policy and legislation;
• Receive and investigate complaints and ensure that consumer rights are protected, and
• Enforce the Act and take action against contravening institutions.

The objectives of the National Credit Act (NCA)

• To promote a fair and non-discriminatory marketplace for access to consumer credit and for that purpose to provide for the general regulation of consumer credit and improved standards of consumer information;
• to promote black economic empowerment and ownership within the consumer credit industry;
• to prohibit certain unfair credit and credit-marketing practices;
• to promote responsible credit granting and use and for that purpose to prohibit reckless credit granting;
• to provide for debt re-organisation in cases of over-indebtedness;
• to regulate credit information;
• to provide for registration of credit bureaux, credit providers and debt counselling services;
• to establish national norms and standards relating to consumer credit;
• to promote a consistent enforcement framework relating to consumer credit;
• to establish the National Credit Regulator and the National Consumer Tribunal;
• to repeal the Usury Act, 1968, and the Credit Agreements Act, 1980; and to provide for related incidental matters.

Key features of the National Credit Act

• Language in credit agreements must be in simple and understandable;
• Quotes must be given on all credit agreements, and are binding for 5 days;
• Advertising and marketing must contain prescribed information on the cost of credit;
• Credit sales at a person’s home or work are strictly limited;
• Reasons must be provided if a credit application is declined;
• Automatic increases in credit limits are regulated;
• Reckless lending is prohibited;
• Interest and fees are regulated on all agreements, including micro-loans;
• Credit Bureau are regulated and consumers have the right to a free credit bureau record;
• Debt counselling is introduced, to enable restructuring of debts for over-indebted consumers.

The National Consumer Tribunal

The National Consumer Tribunal hears cases on non compliance with the Act, issues fines and provides redress to consumers. Consumers and credit providers may appeal to the Tribunal against any decision of the National Credit Regulator. The Tribunal is a separate institution that is independent of the National Credit Regulator. The Tribunal consists of a Chairperson and at least 10 other members.

References