The National Credit Act, 34 of 2005 (“NCA”) is aimed at protecting consumers who enter into credit agreements with credit providers. A credit provider, as defined by the NCA, is required to register as such with the National Credit Regulator (NCR) and a registration certificate will then be issued which must specify the identity of the registrant as well as the activities that the registration permits the registrant to engage in and provide to the public. This certificate must be displayed at the credit provider’s place or places of business.
Despite the NCA providing a clear understanding of who needs to be registered as a credit provider, there is still some confusion around this topic. Credit providers who do not need to be registered as such in terms of the NCA, are still asked to provide NCR Certificates, and if they are unable to do so, the lawfulness of the credit agreement is questioned.
In Collotype Labels RSA (Pty) Ltd v Prinspark CC and Others this issue was decided with reference to section 40(1) of the NCA which states that, “A person must apply to be registered as a credit provider if the total principal debt owed to that credit provider under all outstanding credit agreements, other than incidental credit agreements, exceeds the threshold prescribed in terms of section 42(1).” This threshold is currently R0.00.
An incidental credit agreement is one in which goods or services have been provided to a consumer and a fee, charge or interest only becomes payable when payment of that account is not made on or before a determined period or date; or when two prices are quoted for settlement of the account, the lower price being applicable if the account is paid on or before a determined date, and the higher price being applicable when the account has not been paid by that date. Essentially, if interest is only levied when payment is not received within 30 days of statement, the credit agreement is an incidental credit agreement.
If the above applies and the credit provider is not registered as such in terms of the NCA, is the credit agreement lawful? The NCA states that the credit agreement would only be unlawful and void if the credit provider was required to be registered in terms of the Act at the time the agreement was made.
Thus, if the credit provider is not required to be registered as such in terms of the NCA, the credit provider will not be in possession of a NCR Certificate and the credit agreement entered into with it, cannot be considered unlawful.
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