What is the National Credit Act?

11/30/2015


The National Credit Act was signed into law by the President on 15 March 2005, and governs the assessment, application and maintenance of credit granted by a credit provider to a consumer within the Republic of South Africa.
The NCA must be read in conjunction with the Regulations passed in terms of the Act.
The NCA has updated areas of the law that were contained in the Credit Agreements Act, the Usury Act and other legislation that were cumbersome, ineffective and subject to abuse or obsolete.
It replaced three pieces of legislation:
  • the Usury Act, 1968;
  • the Integration of Usury Laws Act, 1996 (i.e. the Exemption Notice to the Usury Act exempts microloans (loans of less than R10,000) from the Usury Act and allows microloans to operate outside of certain requirements of the Usury Act); and
  • the Credit Agreements Act 1980.
The Usury Act governed leasing, credit and money lending transactions.
The NCA also makes amendments to other legislation.
What is the purpose of the NCA?
Some of the main purposes of this Act are to:
  • Promote and advance the social and economic welfare of South Africans;
  • Promote a fair, non-discriminatory, controlled, competent, sustainable, responsible, efficient and accessible credit marketplace ; and
  • Simplify and standardise the manner in which information is disclosed in credit agreements;
  • To regulate credit bureaux and the information they keep on record about consumers;
  • To ensure that all credit products are handled in the same way by different credit providers;
  • To assist over-indebted consumers to restrict their debt;
  • To have a regulator to regulate the entire credit market, being the National Credit Regulator;
  • To establish the National Consumer Tribunal to adjudicate matters relating to the Act.
Which persons fall within the scope of the NCA?
  • Credit providers offering credit in excess of a prescribed threshold / volume;
  • Consumers – all individuals, trust, juristic persons [e.g. companies, close corporations partnerships and an association of persons], however not all sections apply to juristic persons. Nedbank will assess the applicability of the Act to the juristic person each time a new credit agreement is entered into.
  • Credit providers include:
    • Banks;
    • Micro lenders;
    • Retailers such as furniture and clothing stores;
    • All businesses, companies, close corporations, partnerships and individuals who do business on credit, provide loans or charge interest on overdue accounts; and
    • Who offer credit within the prescribed threshold values in terms of the Act.
  • Consumers include:
    • Natural person (individuals)
    • Certain juristic persons [e.g. companies, close corporations, trusts (with more than three individual trustees), partnerships and an association of persons] whose asset value or annual turnover, together with the combined asset value or annual turnover of all related juristic persons, at the time the agreement is made, equals or exceeds the threshold as determined by the Minister in terms of section 7(1) of the Act, which threshold value is currently R1 million.
  • Debt Counsellors
  • Credit Bureaux

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