what the credit act means to you
24 April 2007
Most of us know the National Credit Act (NCA) takes effect on 1 June this year — but what does it mean, and how will it affect you?
The NCA was created in order to regulate the credit industry in South Africa in order to protect you, the consumer, from poor credit practices. The act creates a new regulatory body called the National Credit Regulator, which is responsible for monitoring compliance with the act and for educating consumers about their rights.
The legislation is designed to:
Most importantly, it is meant to protect you against unfair and unlawful credit provision. That means stamping out reckless credit behaviour — both by credit providers and consumers.
So from 1 June onwards, the NCA will apply to all credit agreements, with credit providers now required by law to comply with all the provisions of the NCA or they will not be allowed to offer credit. Crucially one of the most important functions of the act is to ban negative-option marketing, in other words, marketing in which you have to provide a "no" response to offers of credit to stop future offers automatically coming through to you.
Along with the act, you'll also be able to take your disputes with credit providers to the National Consumer Tribunal, which will hear your complaints about credit agreements and credit providers and mete out penalties and issue declaratory orders on your behalf, says Quinton Cronje, Head of Marketing for Clicks.
The act will also ensure that you are provided with all the relevant information to make an informed decision before entering into a credit agreement.
A credit provider must provide you with a quotation, showing all the relevant costs and repayment values, before you sign the agreement. The quote is valid for five days, during which you can shop around and explore other options.
Simply, the act places a greater responsibility on credit providers to ensure that you can afford the credit before you commit to it.