How does the National Credit Act affect you?
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 What is the National Credit Act and how does it affect you as an ordinary consumer? Here is a very brief overview of the NCA.
The National Credit Act 34 of South Africa 2005 that came into effect on 1 June 2007 was passed to protect consumers from unscrupulous lenders. It was introduced to prevent people from spending money they don’t have by way of a multitude of loans, credit cards, store cards and other debt. It is there to assist banks to manage the massive credit debt that South Africa has and help put an end to reckless lending by the banks. It now also falls to Estate Agents and Bond Originators, as intermediaries between the banks and the property purchaser, to act responsibly and within the confines of the NCA. Consumers also need to take responsibility for them selves by monitoring their financial commitments.
There are major consequences for banks and other loan companies and lending institutions if they are found to have been irresponsible in advancing loans or are guilty of flouting the new laws that are in place. The NCA applies to a variety of credit products, such as overdraft facilities, credit cards, hire purchase/ installment agreements, leases, secured loans and credit guarantees. It also regulates all institutions that provide consumer credit, including banks, furniture companies, clothing and other retailers, micro-lenders and pawnbrokers. The act allows for debt counseling and the restructuring of debt for over-indebted consumers.
Below are a few fundamental consumer rights that are due to you when you apply for credit:
- If for any reason you are denied credit (or have credit discontinued) you need to be supplied in writing reasons for this
- The right to information in plain and easy to understand language
- The right to have access to and to challenge credit records held by Credit Bureaux, to have incorrect records corrected and to be given notification before negative information is reported to the Credit Bureau.
Here is a list of some of the things that have changed with the advent of the NCA:
- Quotations must disclose the full costs of the credit applied for, including all fees and interest to be charged
- Any quotation given be a credit provider is binding by said provider for 5 days. The consumer will need to provide detailed information such as proof of income, household budget etc.
- Credit providers need to keep a record of all credit applications and credit agreements for a prescribed period
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