What is the National Credit Act supposed to do?
- Make credit providers take more responsibility for their actions.
- Look out for consumer interests.
- Credit may not be offered to people who can’t afford it.
In which ways should the National Credit Act look out for consumers?
Promote the social and financial interests of SA consumers.
Promote a fair but competitive credit market.
Ensure that consumers know exactly what is included in their credit contracts.
Ensure credit is available without discrimination.
Protect consumers against unfair business practices.
Which credit agreements are covered by the National Credit Act (NCA)?
Credit cards and bank overdrafts. Loans and mortgage bonds and micro loans.
List 3 things that are required by the National Credit Act (NCA) for the consumer.
- Credit providers must do a thorough check on the consumer’s ability to repay.
- Consumers must give complete information about their income and debt responsibilities.
- Debt counselling services are available for the consumers who are in financial difficulty.
List 3 things that the National Credit Act (NCA) requires credit providers to do.
- The language used in credit agreements must be simple and easy to understand.
- The cost of credit being offered must be stipulated.
- Interest and fees charged by the credit providers is regulated by the NCA
What is micro lending?
Smaller loans to a maximum of R10 000 with strict regulations to protect the lender and the borrower from loan sharking.
What is loan sharking?
Lending small amounts at impossible to repay interest rates and then threatening physical harm if the borrower doesn’t repay. Often used by gangsters.
What are the functions of the National Credit Regulator (NCR)?
Educate consumers about their rights; monitor and control the credit market and the cost of credit identification; advise government on credit policy and investigate all credit related complaints.
How does a pyramid scheme work?
Recruiters must recruit more people to sell the product so the people on top make more money. Eventually the scheme collapses and members lose their money.
Are pyramid schemes legal in South Africa?
No.
When is a creditor guilty of reckless lending?
When they don’t assess the consumer’s ability to repay the loan and ensure that the lender understands exactly how the loan will work.
What is the National Consumer Tribunal?
Its a consumer credit court that hears consumer complaints about credit agreements and providers.
Can providers appeal a ruling from the National Consumer Tribunal?
Yes but the rulings hold the same status as those made by the High Court of SA.
What is debt counselling?
A service that helps consumers to manage their debt by mediating between the consumer and the credit provider.
Name 3 ways in which debt counselling can help consumers to manage their debt.
- Debt consolidation
- Lower interest rates or repayments
- Extend the length of the payback period.
What are the consumer’s rights in regards to credit?
To apply for credit without discrimination; to be given a reason for a refusal; to have the contract in easily understood language; to have all costs stipulated up front.
What responsibilities do the consumer have in terms of credit?
Use products correctly according to the manufacturer’s instructions; read the warrantee and save all proofs of purchase, receipts, instructions and warranties.
