National Credit Act 34 of 2005

National Credit Act 34 of 2005

Overview

Protection of Consumers

• To promote a fair & non-discriminating market for the access of credit

• To prohibit unfair practices

Responsible credit granting practice

• Prohibit reckless credit granting• Provide for general regulation of consumer

credit• Provide debt restructuring in cases of over-

indebtedness• Establish NCR & National Consumer Tribunal

Types of Credit Agreements

• Credit facility eg credit card• Credit transaction eg pawn transaction;

discount transaction; instalment transaction; mortgages, secured loans, leases; credit guarantees (suretyship)

Exclusions under NCA

• Policy of insurance• Lease of immovable property

Consumer rights and duties

• Right to apply for credit, free of discrimination against the borrower

• Right to be protected against discrimination on the granting of credit

• Right to plain and simple language being used in credit agreements

Consumer rights and duties

• Right to receive a cop oyf credit agreements• Right to privacy regarding personal

information• Right to free Credit Bureaux record once a

year• Right to assistance by debt counsellor

• Right to reasons why credit application may have been refused.

Fees and Charges

• Closed list of fees, charged interest & items a credit provider may recover from consumer

Debt Review

• Consumer may apply to debt counsellor to be declared over-indebted.

• Debt counsellor may recommend that the magistrates’ court make an order that one or more of the consumer’s credit agreements should be declared reckless credit; or consumer’s obligation should be rea

• Debt counsellor may recommend that the magistrates’ court make an order that

• that one or more of the consumer’s credit agreements should be declared reckless credit;

• or consumer’s obligation should be rearranged.

Magistrates’ court

• It may reject the recommendation or application

• Credit provider who received notice of court proceedings may not enforce any right under credit agreement until either court has considered the matter.

• S129 of NCA

Unlawful provisions of credit agreements

• Deprives a consumer or credit provider of any statutory or common law rights & obligations;

• Exempt credit provider from liability for any act or representation;

• States that consumer has received goods or services which have not in fact been delivered to the consumer;

Unlawful provisions of credit agreements

• Acknowledges that before the agreement was made, no representations or warranties were made in connection with the agreement by the credit provider;

• Agrees to forfeit money to the credit provider if the consumer exercises the right of rescission

Unlawful provisions of credit agreements

• Appoints credit provider as an agent of the consumer;

• Authorises any person acting on behalf of the credit provider to enter any premises to take possession of the goods;

• Undertakes to sign in advance any document to enforce the agreement;

Unlawful provisions of credit agreements

• Undertakes to sign in advance any document to enforce the agreement;

• Consents to predetermined value of costs for enforcement of the agreement;

• Limits the credit provider’s liability for court action

Unlawful provisions of credit agreements

• Consents to the jurisdiction of any court outside the area inc which the consumer resides or works;

• Agrees to deposit with credit provider an ID, bank account or atm access card.

• Provides personal identification code or number to be used to access an account

Unlawful provisions of credit agreements

• States that the rate of interest is variable.

Four additional protection available to parties to a credit agreement

• Consumer must disclose location of goods.• Obligations are imposed on pawn brokers.• Limits are imposed on the costs of credit.• Statements of account must be provided

Termination of credit agreement

• Rescission• Early settlement.• Surrender of goods.• Debt enforcement by repossession or court

judgement

Rescission

• Consumer can withdraw from lease or an instalment agreement only if it was entered into at a location other than the registered business premises of the credit provider.

• Creditor provider must refund any money the consumer has paid under agreement with seven days after the delivery of the notice to terminate.

Early settlement

• Consumer can terminate the agreement at any time wi.thout notice to the credit provider by payment of the full settlement amount

Surrender of goods

• Consumer under an instalment agreement secured by loan or lease may give written notice to the credit provider to terminate the agreement.

Debt enforcement by repossession or court judgement

A credit provider may go to court for a judgement if:- Consumer has been in default under the credit

agreement for at least 20 days.- At least ten days have passed since the credit

provider deliver a notice to the consumer & consumer has not responded.

- In the case of instalment agreement, secured loan, or lease, the consumer must also not have surrendered the relevant property to the credit provider.

2nd Test

• Monday 01 October 2012• Time: 16h30• Venue: Elco• Scope Contract of Sale