Business Law II
CML2010Z UCT
,Consumer Credit
Section 1
, Terminology and Concepts
Credit agreements identified by:
1. Credit is extended – creditor lends money to
debtor with an agreement of repayment in The National Credit Act 34 of 2005:
future
• Governs consumer credit in SA since
2. The is a cost to the debtor – e.g. interest, 2007 (regulations amended often)
charges, fees, etc
Aims: (continued)
Importance of regulation:
• Promote development of the credit
Crucial to protect individuals from exploitation by
powerful businesses and organisations
market
• Regulations address power imbalances • Promote responsible borrowing
• The National Credit Act 35 (NCA) enhances • Address imbalances in negotiating
consumer protection power
Reflects transformative constitutionalism – fairer
legal system in line with Constitutional values • Improve access to information
(consumers)
• Also promotes access to credit for financial
inclusion (individuals can obtain credit) • Promote better dispute resolution
• Prevents reckless lending and over-indebtedness
, Continued
‘Consumers’ under the NCA: ‘Credit Provider’ under the NCA:
Natural persons who borrow money Anyone who lends to a consumer in a
under a credit agreement credit agreement more than R1 (not
necessarily as part of business)
• All natural persons are consumers
• However, unregistered credit provide
Juristic persons – generally not cannot lawfully enforce an agreemen
consumers (only when very small) The credit agreement is unlawful (thus
void)
• Must have a net asset value and
annual turnover, both below R1m • If the credit provider is the Reserve
at the time of the loan Bank, NCA doesn’t apply
The State or an ‘organ of State’ are ‘Credit Agreement’ under the NCA:
never consumers
A loan to a consumer at arm’s length
where there is a cost of credit that will
covered
CML2010Z UCT
,Consumer Credit
Section 1
, Terminology and Concepts
Credit agreements identified by:
1. Credit is extended – creditor lends money to
debtor with an agreement of repayment in The National Credit Act 34 of 2005:
future
• Governs consumer credit in SA since
2. The is a cost to the debtor – e.g. interest, 2007 (regulations amended often)
charges, fees, etc
Aims: (continued)
Importance of regulation:
• Promote development of the credit
Crucial to protect individuals from exploitation by
powerful businesses and organisations
market
• Regulations address power imbalances • Promote responsible borrowing
• The National Credit Act 35 (NCA) enhances • Address imbalances in negotiating
consumer protection power
Reflects transformative constitutionalism – fairer
legal system in line with Constitutional values • Improve access to information
(consumers)
• Also promotes access to credit for financial
inclusion (individuals can obtain credit) • Promote better dispute resolution
• Prevents reckless lending and over-indebtedness
, Continued
‘Consumers’ under the NCA: ‘Credit Provider’ under the NCA:
Natural persons who borrow money Anyone who lends to a consumer in a
under a credit agreement credit agreement more than R1 (not
necessarily as part of business)
• All natural persons are consumers
• However, unregistered credit provide
Juristic persons – generally not cannot lawfully enforce an agreemen
consumers (only when very small) The credit agreement is unlawful (thus
void)
• Must have a net asset value and
annual turnover, both below R1m • If the credit provider is the Reserve
at the time of the loan Bank, NCA doesn’t apply
The State or an ‘organ of State’ are ‘Credit Agreement’ under the NCA:
never consumers
A loan to a consumer at arm’s length
where there is a cost of credit that will
covered
