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Explore the key changes and sections of the 2005 National Credit Bill, covering areas such as escalating interest, definitions, and unlawful provisions to protect consumers. Learn about incidental credit and written statement requirements.
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Scope • Escalating interest • Incidental credit • New definitions • Extension of the “in writing” requirement • Unlawful provisions • Technical amendments
Escalating interest • Escalation of interest on student loans prohibited • Section 103(4) A credit agreement may provide for the interest rate to vary during the term of the agreement only if the variation is by fixed relationship to a reference rate stipulated in the agreement, which reference rate must be the same as that used by that credit provider in respect of any similar credit agreements currently being issued by it.
Escalating interest • In order to allow for varying interest rates on development credit • 103(7) Subject to the review and approval of the National Credit Regulator, subsection (4) does not apply in respect of developmental credit agreements.
Incidental credit • Problem: no difference between definition of credit facility and definition of incidental credit for continuous service agreements • Decision to exclude and further clarify
Incidental credit 4(6) Despite any other provision of this Act - (a) if a consumer pays fully or partially for goods or services through a charge against a credit facility that is provided by a third party, the person who sells the goods or services must not be regarded as having entered into a credit agreement with the consumer merely by virtue of that payment; and (b) if an agreement provides that a supplier of a utility or other continuous service - (i) will defer payment by the consumer until the supplier has provided a periodic statement of account for that utility or other continuous service; and (ii) will not impose any charge contemplated in section 103 in respect of any amount so deferred unless the consumer fails to pay the full amount due within at least 30 days after the date on which the periodic statement is delivered to the consumer, that agreement is not a credit facility within the meaning of section 8(3), but any overdue amount in terms of that agreement, as contemplated in subparagraph (ii), is incidental credit to which this Act applies to the extent set out in section 5.
Definitions continuous service means the supply for consideration of a utility or service, other than credit or access to credit, or the supply of such a utility or service combined with the supply of any goods that are essential for the utilization of that utility or service by the consumer, with the intent that, so long as the agreement to supply that utility or service remains in force, the supplier will make the service continuously available to be used, accessed or drawn upon - (a) from time to time as determined by the consumer, and (b) with any frequency or in any amount as determined, accessed, required, demanded or drawn upon by the consumer, subject only to any total use or cost limits set out in the agreement;
Definitions Utility means the supply to the public of an essential - (a) commodity, such as electricity, water, or gas, or (b) service, such as waste removal, or access to sewage lines, telecommunication networks or any transportation infrastructure;
Written statements • Requirement for written statements very restrictive • Need to be more facilitative and allow for voice recordings
Written statements Negative option marketing and opting out requirements 74(6) When entering into a credit agreement, the credit provider must present to the consumer a [written] statement of the following options and afford the consumer an opportunity to select any of those options: (a) To decline the option of pre-approved annual credit limit increases as provided for in section 119(4), if the agreement is a credit facility; and (7) A credit provider— (a) must maintain a register in the prescribed manner and form of all options selected by consumers in terms of subsection (6); and (b) must not act in a manner contrary to an option selected by a consumer in terms of subsection (6).
Written statements 124. (1) It is lawful for a consumer to provide, a credit provider to request or a credit agreement to include [a written direction authorising] an authorisation to the credit provider to make a charge or series of charges contemplated in section 90(2)(n), if such [direction] authorisation meets all the following conditions: (a) The charge or series of charges may be made only against an asset, account, or amount that has been— (i) deposited by or for the benefit of the consumer and held by that credit provider or that third party; and (ii) specifically named by the consumer [in writing] in the authorisation; (e) any authorisation not given in writing, must be recorded electromagnetically and subsequently reduced to writing.
Unlawful provisions Input from Department of Justice through the State Law Advisor 90(2) A provision of a credit agreement is unlawful if - (k) It expresses, on behalf of the consumer - (vi) a consent to the jurisdiction of- (aa) the High Court, if the magistrate's court has concurrent jurisdiction; or (bb) any court seated outside the area of jurisdiction of a court having concurrent jurisdiction and in which the consumer resides or works or where the goods in question (if any) are ordinarily kept;
National Treasury Omission of the dti to previously exclude request from NT
Technical amendments juristic person includes a partnership, association or other body of persons corporate or unincorporated, or a trust if - (a) there are three or more individual trustees, or (b) the trustee is itself a juristic person, but does not include a stokvel; Other technical amendments
