National Credit Act
National Credit Act 34 of 2005
The National Credit Act, which came into effect on 1 June 2007, governs the granting and management of credit by all credit providers, including micro lenders, banks and retailers.
The Act was introduced to reduce reckless credit behaviour (by credit providers and consumers) and over-indebtedness in South Africa. It applies to all categories of credit agreements entered into between Investec Private Bank and affected parties, at arm’s length. Juristic persons (companies, close corporations and certain trusts) are largely excluded from the ambit of the Act.
There are certain requirements that we, as credit providers, need to meet. This includes:
- Greater disclosure on the cost of credit
- Regulation of advertising and marketing at home or the workplace
- Prohibition of unlawful terms, conditions or clauses
- Prohibition of negative option marketing and automatic credit increases
In terms of the Act, there is much greater focus on the affordability assessment in respect of the proposed loan, as there are serious sanctions in the event of reckless lending. It is therefore critical that you fully disclose your financial obligations and income (the onus is on the client to give full disclosure).