The prevention and alleviation of consumer over-indebtedness

The Prevention andAlleviation of ConsumerOver-indebtedness*

MICHELLE KELLY-LOUW**University of South Africa

1 IntroductionCurrent data on volumes of consumer credit extended in South Africa is

unreliable and incomplete. This problem came about as there existed differentauthorities dealing with bank and non-bank credit. The South African ReserveBank collected data from banks; Statistics SA collected data from retailers,which included sales on open account; and the Micro Finance RegulatoryCouncil collected data from the micro-lenders.1 However, it is estimated thatthe size of the credit market is currently some R800b.2

It is important to have accurate statistics on national levels of debt (credit)and the number of people who are over-indebted. This enables government tomonitor the position, and to introduce the necessary consumer-protectionmeasures if required. The newly established National Credit Regulator istasked with the role of conducting regular surveys on the levels ofindebtedness, so that trends may be monitored and the adequacy of existingmeasures may be reviewed from time to time.3 Section 18(1)(c) of the newNational Credit Act 34 of 20054 provides that the National Credit Regulatorhas the responsibility to report annually to the Minister of Trade and Industryon the volume and cost of different types of consumer-credit products, themarket practices relating to those products, and the implications for consumerchoice and competition in the credit market. It may be hoped that the NationalCredit Regulator will soon be able to provide the public with accuratedebt/credit data.

The National Credit Act repealed the Credit Agreements Act 75 of 1980and Usury Act 73 of 1968. These latter acts have been subjected to extensivecriticism and were greatly in need of revision. The National Credit Act is the

* This article is based on M Kelly-Louw ‘Prevention of Over-indebtedness and Mechanisms forResolving Over-indebtedness of South African Consumers’ in: I Ramsay, WC Whitford & JNiemi-Kiesilainen (eds) Consumer Credit, Over-Indebtedness and Bankruptcy: National andInternational Dimensions (2008) [to be published]. Portions of this chapter have been used here with thepermission of the editors.

** BIuris LLB LLM (Unisa), Dip Insolvency Law and Practice (UJ). Associate Professor in theDepartment of Mercantile Law, School of Law, University of South Africa.

1 See P Hawkins The Cost, Volume and Allocation of Consumer Credit in South Africa (Mar 2003) inpar 2.3 at 6 (also available at http://www.thedti.gov.za//ccrdlawreview/forward.htm (last visited on 23Jan 2008)).

2 See the National Credit Regulator’s Annual Report (2007) (‘Annual Report’) at 9 (available athttp://www.ncr.org.za (last visited on 21 Jan 2008)).

3 See the Department of Trade and Industry Consumer Credit Law Reform: Policy Framework forConsumer Credit (Aug 2004) (‘Policy Framework for Consumer Credit’) at 31.

4 For a discussion of the Act, see eg, S Renke & M Roestoff & FS Haupt ‘The National Credit Act:New Parameters for the Granting of Credit in South Africa’ (2007) 28 Obiter 229, and JM Otto TheNational Credit Act Explained (2006).

© 2008. All rights reserved.Cite as: (2008) 20 SA Merc LJ 200–226.200

product of an in-depth legal-comparative project by the Department of Tradeand Industry and represents a major departure from the previous credit-regulation regime in that its scope is much wider. The National Credit Act,and the Regulations promulgated in terms of it, aim to solve specific problemsin the existing consumer-credit market, including the prohibition of recklesslending by credit providers, the prevention and alleviation of the over-indebtedness of consumers, and the prevention of the high costs of credit. Inaddressing these problems, the National Credit Act has also established twonew consumer credit institutions, the National Credit Regulator and theNational Consumer Tribunal; made it compulsory for credit providers, creditbureaux, and debt counsellors to register with the National Credit Regulator;and placed caps on interest rates and other (non-interest) costs of credit.

In this article I will first pay brief attention to why the previous creditlegislation became outdated and ineffective, and why it was important tocreate an entirely new regime to deal with consumer credit. Then I willspecifically consider the sections that have been included in the NationalCredit Act in an attempt to prevent consumers from becoming over-indebted,and the mechanisms that have been included to alleviate the over-indebtedness of consumers.

2 Outdated Legislation and the Birth of the Micro-lendingIndustryIn the past, the consumer-credit legislation consisted mainly5 of the Usury

Act and the Exemption Notices of 1992 and 1999 issued in terms of its s 15A,and the Credit Agreements Act 74 of 1980.

The Usury Act covered money lending of up to R500 000 and only cappedthe interest rates for these loans. At the time of its repeal, the cap stood at 26per cent per annum. The Usury Act provided that basic disclosures had to bemade to the consumers (that is, borrowers). However, it was only selectivedisclosures that were made and it often happened that not all the costs ofcredit were disclosed. In practice, it was only interest rates that were disclosedand there were also no penalties for non-compliance. Many factors haveimpacted on the consumer credit market since the passing of the Usury Act in1968 and over the years the Act became outdated. For instance, it was draftedbefore credit cards, access bonds on home loans, and micro loans wereavailable in South Africa. The Act was also rather complicated and oftenmisunderstood by many.6

5 Other pieces of legislation that also govern financial transactions by consumers include theLay-Byes Regulations (see GN R1234 in GG 7068 of 13 Jun 1980, as amended by GN R1814 in GG3061 of 29 Aug 1980) made under the Sales and Service Matter Act 25 of 1964, the Alienation of LandAct 68 of 1981, and the Banks Act 94 of 1990.

6 See Hofmeyr, Herbstein & Gihwala Inc (R Willemse & N Mxunyelwa) ‘Report for the Purposes ofthe Credit Law Review’ (Dec 2002) (also available at http://www.thedti.gov.za//ccrdlawreview/forward.htm (last visited on 23 Jan 2008)) in pars 4.1 and 6.7.

PREVENTION AND ALLEVIATION OF CONSUMER OVER-INDEBTEDNESS 201

In 1992 the first Exemption Notice was issued in terms of s 15A of theUsury Act.7 In terms of this notice, loans under R6 000 were exempted fromthe provisions of the Act and the interest rates that could be charged on theseloans were uncapped. Therefore, lenders could ask any interest rate theywished. This then gave birth to a large, unregulated micro-lending industry.8

Low-income and poor consumers with no securable assets who could notaccess finance in the formal financial sector, obtained finance there whereinterest rates and other costs of credit were high. At some point it wasrecorded that some lenders went so far as charging interest rates of 30 or moreper cent per month, or even 360 per cent per year.9 As the micro-lendingindustry did not have access to the National Payment System, like banks did,they employed extreme and unregulated money-collecting procedures. Theseprocedures consisted of lenders obtaining and holding consumers’ bank cardsand private identification numbers and then drawing a monthly amount fromthe consumers’ bank accounts to service their loans. Sometimes they wouldgive consumers only a small cash amount to enable them to fund their normalliving costs. They often left them with no money at all.

In 1999, the first Exemption Notice was repealed and replaced. Thereplacing Notice10 brought about a new dispensation for the micro-lendingindustry. In terms of this Notice, loans of up to R10 000 which were payablein less than 36 monthly instalments and not advanced by credit card oroverdraft were exempted from the provisions of the Usury Act and the cappedinterest rates. However, there were also other conditions that micro-lendershad to comply with in order to qualify for the exemption. The most importantwas that micro-lenders had to register with a body called the Micro FinanceRegulatory Council.11 The Exemption Notice of 1999 thus attempted toregulate the micro-lending industry. However, this provided limited regula-tion, as the Micro Finance Regulatory Council only had control of thoselenders registered with it. The 1999 Exemption Notice (and the Micro FinanceRegulatory Council, to a certain extent) also provided for limited disclosuresto be made to consumers, and for administrative penalties in the event ofnon-compliance by registered micro-lenders. The practice of such lenders ofcollecting their money by way of keeping a consumer’s bank card and private

7 See notice 73 in GN R3451 in GG 14498 of 31 Dec 1992.8 See Hofmeyr, Herbstein & Gihwala Inc op cit note 6 in par 4.2.9 See J Campbell ‘The Excessive Cost of Credit on Small Money Loans Under the National Credit

Act 34 of 2005’ (2007) 19 SA Merc LJ 251 at 252; GA Dymski ‘Interest Rates and Usury in EmergingMarkets’ (21 Mar 2003) (also available at http://www.thedti.gov.za//ccrdlawreview/forward.htm (lastvisited on 23 Jan 2008)) at 18; Rudo Research & Training A Market Research Report: Credit LawReview (Dec 2002) (also available at http://www.thedti.gov.za//ccrdlawreview/forward.htm (last visitedon 23 Jan 2008)) at 4; P Bamu & D Collier ‘Reforming the Microcredit Industry in South Africa: Willthe Proposed National Credit Bill Address Existing Problems and Developmental Concerns?’Occasional Paper 1/2005, Development and Labour Monograph Series, Institute of Development andLabour Law, University of Cape Town (2005) at 6; and Lurama Vyftien (Pty) Ltd & 49 Others v TheMinister of Trade and Industry & Another (unreported, TPD, case no 22125/1999) at 34.

10 See Notice 713 in GG 20145 of 1 Jun 1999, as amended by Notice 910 in GG 20307 of 16 Jul1999.

11 See the Council’s website at http://www.mfrc.co.za (last visited on 21 Jan 2008).

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identification number was specifically abolished in the Exemption Notice. Itwas also later prohibited under the Usury Act itself.12 One loophole not closedby the Exemption Notice was that lenders offered the same consumer severalloans of R10 000 or less, so that they advanced large amounts of moneyoutside the provisions of the Usury Act and thus at very high interest rates.13

A National Loans Register was launched in November 2000 and registeredlenders had to report certain information regarding their loans to the MicroFinance Regulatory Council.

Another Act that governed consumer credit to a certain extent was theCredit Agreements Act. It mainly dealt with instalment-sale transactions anddid not apply to money-lending transactions. This Act basically dealt with theagreement (that is, the contract) itself, for example with its written format, andthe deposit that was required. A deposit was used as a way to determine if aperson could afford to enter into the instalment-sale transaction. However, inan attempt to side-step this requirement, if often happened that the creditor(that is, the seller) paid the deposit on behalf of the consumer (the buyer).While the Credit Agreements Act was mainly concerned with the contractualaspects of credit agreements, the Usury Act aimed to regulate the financialaspects of such contracts. Although the Credit Agreements Act did not dealwith money-lending transactions as did the Usury Act, their scopesoverlapped and anomalies between the two pieces of legislation did exist.14

3 The Background to the National Credit ActThe South African financial sector has always been rather complicated. It

consisted of two disparate sectors. On the one hand, a highly developed,formal financial system (serving primarily middle and high-income andpredominantly White consumers and large enterprises, the servicing beingmainly by banks and other financial institutions), and on the other hand, alarge, informal financial market (serving low-income and largely historicallydisadvantaged consumers and small and medium enterprises, the servicinghere being mainly by micro-lenders, loan sharks, and pawnbrokers).15 Manylow-income consumers who do not qualify to access finance in the formalmarket, also make use of stokvels16 to gain access to finance and credit.

12 See GN R6959 in GG 21893 of 13 Dec 2000. See also the comments by Hofmeyr, Herbstein &Gihwala Inc op cit note 6 in par 6.4.

13 See Hofmeyr, Herbstein & Gihwala Inc op cit note 6 in pars 4.2 and 5.2.14 Idem in par 5; and Bamu & Collier op cit note 9 at 6.15 See the report prepared for FinMark Trust, South Africa by RP Goodwin-Groen (with input from

M Kelly-Louw) The National Credit Act and Its Regulations in the Context of Access to Finance inSouth Africa (Nov 2006) at 8 (available at http://www.finmarktrust.org.za (last visited on 21 Jan 2008));WG Schulze ‘The Origin and Legal Nature of the Stokvel (Part 1)’ (1997) 9 SA Merc LJ 18 at 18-20;Department of Trade and Industry Credit Law Review: Setting the Scene (Feb 2004) (‘Setting theScene’) at 12; Annual Report op cit note 2 at 3; and Bamu & Collier op cit note 9 at 2-3.

16 For a full discussion of stokvels, see Schulze op cit note 15 and ‘The Origin and Legal Nature ofthe Stokvel (Part 2)’ (1997) 9 SA Merc LJ 153. See also the definition of a stokvel in par 1(b)(i)-(vi) ofGN 2173 in GG 16167 of 14 Dec 1994.


Over the last few years, levels of over-indebtedness have increaseddramatically. There are many reasons for this. It is common cause that since1994, historically disadvantaged consumers, who never had access to credit,suddenly obtained such access. This went hand-in-hand with the transforma-tion of the civil service, affirmative action and aspirational borrowing. Thisagain lead to reckless lending and many found themselves over-indebted orwith no income. The number of administration orders that were granted alsorocketed and became an industry in itself.17 Another reason for the high levelof over-indebtedness appeared to be that a large portion of the historicallydisadvantaged group of consumers were still excluded from the formalfinancial market, which forced them to access their finance, particularly theircredit, through the informal financial market (micro-lenders and loan sharks)where credit was expensive. And legal regulation at a low level. Theseconsumers were often, and are still, considered to present a high risk andgenerally do not possess any assets that could serve as security for their loans.

It became apparent that a dysfunctional credit market existed which wasbased on the following and other problems in the consumer-credit market:18

• fragmented and outdated consumer-credit legislation as well as debt-collection procedures contained in the Magistrates’ Courts Act 32 of1944;19

• ineffective consumer protection, particularly in relation to the low-incomegroups, estimated to represent some 85 per cent of the population;

• the high cost of credit and, for some areas, the lack of access to any credit;• the lack of or selective disclosure regarding credit towards consumers

(although lenders had to disclose certain aspects in terms of the Usury Act– they only disclosed the interest rate and no other costs of credit – therewas no penalties for non-compliance and the Act was not well enforced);

• the exploitation of consumers by micro-lenders, intermediaries, debtadministrators, and debt collectors;

• credit providers behaved recklessly towards consumers when grantingcredit;

• lenders totally disregarded a consumer’s (borrower’s) ability to repay,which lead to high levels of indebtedness;

• there was excessive soliciting and harassing for credit by various creditproviders; and

• credit bureaux were not regulated and they often held and provided faultyand incorrect credit information (consumers were black-listed incorrectlywithout receiving notice of such listing, and they also had no access tocheck whether their credit information was correct).

The financial credit market that had developed was clearly inappropriate forthe present and future political, economic and social context of South Africa.

17 See Hofmeyr, Herbstein & Gihwala Inc op cit note 6 in par 6.5.1. See also the discussion ofadministration orders below in par 7.

18 See Setting the Scene op cit note 15 at 1. See also the research referred to in note 23 below.19 See the market research conducted by Rudo Research and Training op cit note 9.

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It was also a market that was characterised by discrimination, a lack oftransparency, limited competition, high costs of credit, and limited consumerprotection. The mechanisms to prevent over-indebtedness that were in place atthe time, could also not adequately promote the rehabilitation of consumers,and the available debt relief could also not assist already over-indebtedconsumers to deal with their debt. A review of these mechanisms wastherefore necessary. These various factors and the increasing use of credit bylow-income consumers created an urgent need for a closer examination of theprevious credit legislation and the credit market in general.20

Therefore, in 2001 the Department of Trade and Industry decided to reviewthe credit legislation and to investigate the problems that were beingexperienced in the credit market.21 In March 2002, the Department set up aTechnical Committee22 to undertake a review of consumer-credit policy andlegislation, to supervise all the relevant research, and to obtain the necessaryexpert opinions.23 The review was co-ordinated by the Micro FinanceRegulatory Council.24 During the review, extensive research was conducted,focusing on different aspects of the consumer-credit market. This included:25

• consumer perceptions about credit products, credit providers andconsumer protection, assessed through focus group discussions;

• the views of industry representatives, consumer representatives and otherstakeholders on the previous regulatory and legislative framework; and

• a statistical and economic analysis of the consumer-credit market, in termsof the value and cost of different products, and the factors that determinethose outcomes.

Weaknesses in the credit market were identified and these included:26

20 See the Policy Framework for Consumer Credit op cit note 3 at 12-3.21 The need for a review of consumer-credit legislation was already recognized in 1994 when the

South African Law Reform Commission reviewed the Usury Act of 1968: see the South African LawReform Commission ‘Die Woekerwet en Verwante Aangeleenthede’ (Paper 30, Project 67), ConceptReport (Jul 1994)). A number of subsequent reports also commented on the weaknesses inconsumer-credit legislation. These included the Strauss Report on Rural Finance (see the Final Reportof the South African Law Reform Commission Inquiry into the Provisions of Rural Financial ServicesRP 108/96, which was published on 18 Sep 1996); the National Small Business Regulatory Review byNtsika Enterprises Promotion Agency in 1999; and the Policy Board for Financial Services andRegulation’s Report on Small and Medium Enterprises’ Access to Finance in South Africa (2001). Seefurther Setting the Scene op cit note 15 at 1.

22 The Credit Law Review Committee consisted of Mr David Porteous, Prof Roshana Kelbrick, MrKgosi Pule, Mr Moses Moeletsi and Mr Gabriel Davel (Chief Executive Officer of the Micro FinanceRegulatory Council).

23 The following research reports were prepared for the Department of Trade and Industry: Hawkinsop cit note 1; Reality Research Africa Credit Contract Disclosure and Associated Factors: ExecutiveSummary of Research to Determine Public Awareness of Legal Provisions in Relation to Credit andSatisfaction with Provisions for Their Benefit (Dec 2002); and Rudo Research and Training op cit note9. The following expert opinions were obtained: Dymski op cit note 11; Hofmeyr, Herbstein & GihwalaInc op cit note 6; M Kunene (legal advisor to the Micro Finance Regulatory Council) A Comparison ofConsumer Credit Statutes (2002); and P Meagher (IRIS Centre, University of Maryland, United Statesof America) ‘Regulation of Payday Lenders in the United States’ (2002) (also available athttp://www.thedti.gov.za//ccrdlawreview/forward.htm (last visited on 23 Jan 2008)).

24 Mr Peter Setou, an employee of the Micro Finance Regulatory Council, acted as the co-ordinator.25 See Setting the Scene op cit note 15 at 1.26 See the Department of Trade and Industry Credit Law Review: Summary of Findings of the

Technical Committee (Aug 2003) (‘Summary of Findings of the Technical Committee’) (also available at


• inadequate rules on the disclosure of the cost of credit, with the result thatthat cost was regularly inflated above the disclosed interest rate throughthe inclusion of a variety of fees and charges, including excessive creditlife insurance; this undermined the consumer’s ability to make informedchoices, whether between cash and credit purchases or between differentcredit providers, and resulted in reduced consumer pressure on creditproviders to reduce interest rates and costs;

• an unrealistically low Usury Act cap that caused low income and high-riskclients to be marginalised;

• weak and incomplete credit bureaux information that resulted in bad clientselection, ineffectual credit risk management, and high bad debts, with aresultant huge increase in the cost of credit;

• inappropriate debt-collection and personal insolvency legislation thatcreated an incentive for reckless credit provision and prevented effectiverehabilitation of over-indebted consumers;

• excessive predatory behaviour that lead to high levels of debt for certainconsumers and unmanageable risk to all credit providers;

• inconsistencies in legislation related to mortgages and property transfersundermined consumers’ ability to offer security and locked them into highcost, unsecured credit; and

• regulatory uncertainty that caused credit behaviour orientated towardsshort-term profit taking, and a resistance amongst credit providers toproviding longer-term finance, including housing finance and finance forsmall and medium enterprises.

Although it was impossible to ascribe the high cost of and limited access tofinance to any single factor, the combination of factors identified appeared tohave gone a long way towards explaining the underlying problem.27

The Credit Law Committee took stock of the existing consumer creditlegislation – the Usury Act, the Credit Agreements Act, certain provisions ofthe Magistrates Courts Act – and the common law and also researchedconsumer-credit reforms in Europe and in certain other countries. Further-more, it consulted widely with various role players and concluded that boththe Usury Act (including the 1999 Exemption Notice) and the CreditAgreement Act should be replaced by a single piece of legislation, overseenby a statutory regulator. The Committee recommended that the scope of thenew statute should be limited to natural persons, thereby insuring that thelegislation did not inhibit the flexibility and innovation of small-and-medium-enterprise finance. A main proposal was that the focus should be shifted fromprice control to protection against over-indebtedness, and to the regulation ofundesirable lending practices. Furthermore, special attention should also begiven to the activities of credit bureaux and the disclosure of credit-related

http://www.thedti.gov.za//ccrdlawreview/forward.htm (last visited on 23 Jan 2008)); Setting the Scene opcit note 15; and the research reports referred to in note 23 above.

27 See Goodwin-Groen op cit note 15 at 14.

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fees and charges. The Department of Trade and Industry also followed up theTechnical Committee’s findings and recommendations with a PolicyFramework for Consumer Credit.28

The extensive review of credit legislation initiated by the Department ofTrade and Industry eventually resulted in the in the repeal of the CreditAgreements Act and Usury Act and the promulgation of the National CreditAct in 200529 and the National Credit Regulations30 in 2006.31

28 See Policy Framework for Consumer Credit op cit note 3.29 Published as GN 230 in GG 28619 of 15 Mar 2006. The Credit Law Review Committee

supervised all the research and expert opinions (see note 23 above) that were done and obtained beforethe National Credit Act was drafted and it also developed the initial policy proposals: see Summary ofFindings of the Technical Committee op cit note 26). The Credit Law Review was also influenced bycredit-law reform in the United Kingdom, the European Commission and New Zealand (see theMemorandum to the earlier National Credit Bill of 2005). The Department of Trade and Industry tookthe Committee’s proposals and developed them into a ‘Policy Paper’ which formed the basis uponwhich the National Credit Act was drafted: see the Policy Framework for Consumer Credit op cit note 3.Ms Astrid Ludin, the Department of Trade and Industry’s Deputy Director General in charge ofconsumer and corporate regulation was responsible for the drafting of the National Credit Act and itsRegulations. Mr Gabriel Davel, the Chief Executive Officer of the Micro Finance Regulatory Council,was the ‘policy advisor’ and he ensured that the wording of the National Credit Act reflected theDepartment of Trade and Industry’s policy objectives. Mr Peter Setou, also from the Micro FinanceRegulatory Council, also formed part of the team that reviewed the different drafts of the NationalCredit Act. The Department of Trade and Industry also appointed the Micro Finance Regulatory Councilas its representative to assist with the physical drafting of the National Credit Act. The Micro FinanceRegulatory Council, as the representative of the Department of Trade and Industry, appointed variousexperts, particularly from the legal fraternity, to assist with the physical drafting of the National CreditAct. The main drafter of the National Credit Act was the Canadian legislative drafter, Prof Phil Knight.Prof M Kelly-Louw from the University of South provided expert legal advice during the draftingprocess of the Act and she also drafted the consequential amendments contained in Sched 2. AdvocateW Krull also assisted the drafting team and provided expert legal advice during the drafting process.The drafting team of the National Credit Act also consulted broadly with various key players (eg, banks,financial institutions, micro-lenders and other credit providers, retailers, credit bureaus, and consumersgenerally) and interest groups and associations during the drafting process. The earlier National CreditBill of 2005 was introduced into Parliament in March 2005. Thereafter, the Portfolio Committee onTrade and Industry (National Assembly) intensively analysed the Bill and accordingly decided to holdvarious public hearings regarding the Bill during Aug 2005. In addition to this, the Select Committee onEconomic and Foreign Affairs conducted public consultations in each of the 9 provinces. In Dec 2005,the Bill was adopted by Parliament and on 15 Mar 2006 it was assented to by the President.

30 See R489 in GG 28864 of 31 May 2006. The Regulations to the National Credit Act were draftedmainly by various employees of the Micro Finance Regulatory Council (in particular Gabriel Davel andShimoné Fontés), and other legal experts that included Prof M Kelly-Louw, John Symington andCarmen Seele (the latter both from Compliance and Risk Resources (Pty) Ltd)). The team drafting theRegulations consulted broadly with various key players and interest groups and associations during thedrafting process.

31 The National Credit Act came into operation in three phases (see Proc 22 in GG 28824 of 11 May2006):• A large part of the came into operation on 1 Jun 2006, namely ss 1-25; 35-59; 69; 73; 134-162;

164-173; and scheds 1-3). These measures included those that dealt with the application of the Act;the establishment of the National Credit Regulator; the registration requirements for creditproviders, debt counsellors and credit bureaux; and the registration procedures.

• On 1 Sep 2006, the National Consumer Tribunal was established and all the relevant enablingsections of the act came into operation, namely ss 26-34. Certain sections dealing with the creditinformation being held by credit bureaux and consumers’ rights to challenge such information alsocame into operation on this date: ss 67-68; 70; and 72.

• The remaining sections of the Act (ss 60-66; 71; 74-133; and 163) came into operation on 1 Jun2007. These included the sections dealing with the rights of consumers; credit marketing practices;over-indebtedness and reckless lending; consumer credit agreements; the permitted interest rates andother costs of credit; collection and repayment of credit agreements; and the debt collectingprocedures and alternative dispute settlement procedures.


4 The Objectives and Application of the National Credit ActThe National Credit Act’s overarching purpose is to create a single system

of credit regulation and a National Credit Regulator to administer the creditindustry. It seeks to promote and advance the social and economic welfare ofSouth Africans, and to promote a fair, transparent, competitive, efficient andaccessible credit market for all, particularly those who have historically beenunable to access credit under sustainable market conditions. It also aims toprohibit unfair credit and credit-marketing practices and to protect theconsumers of credit. A further objective is to encourage responsibleborrowing, the avoidance of over-indebtedness and reckless lending, and toprovide for a consistent and harmonised system of debt restructuring,enforcement and judgement.32

The National Credit Act provides that, subject to certain exemptions, itgenerally applies to all credit agreements (that is, money-lending transactionsirrespective of the amount)33 between parties dealing at arm’s length34 andconcluded or having an effect in South Africa.35

Although the Act applies mainly to situations where the consumer (theborrower or debtor) in a credit agreement is an individual (a natural person),certain parts of the Act also apply to a credit agreements where the consumeris a company, a close corporation, a partnership, a trust where there are threeor more individual trustees or where the trustee is itself a juristic person, orany other association or body of persons irrespective of whether or not it isregistered in terms of any Act provided its asset value or annual turnover, atthe time the agreement is made, does not equal or exceed a certain prescribedamount,36 currently R1 000 000. However, where the consumer takes the formof one of these businesses, the Act will have limited application. For instance,the provisions relating to reckless lending and over-indebtedness, and also theprovisions capping the interest rates and other costs of credit, will not apply incases where the consumer is one of these small and medium businesses.37

32 See the preamble to and s 3 of the National Credit Act.33 The word ‘credit’, when used as a noun, is defined in s 1 as ‘a deferral of payment of money owed

to a person, or a promise to defer such a payment; or a promise to advance or pay money to or at thedirection of another person’. Therefore, an agreement will be a credit agreement for the purposes of theAct if two elements are present, namely (1) some deferral of repayment or prepayment; and (2) a fee,charge, or interest imposed with respect to a deferred payment, or a discount when prepayments aremade. Included in the definition of a credit agreement (see s 8) is a credit facility (eg, a credit card); acredit transaction (eg, an instalment-sale agreement, which is a transaction where movable goods aresold by the seller to the buyer against payment by the latter to the seller of a sum of money plus interestand other costs at a future date, in whole or in instalments, or a house mortgage agreement); and a creditguarantee (eg, a suretyship). However, there are also specific agreements which are not considered to becredit agreements for purposes of the National Credit Act (see s 8(2)) and they include a normal policyof insurance; a lease of immovable property; and a transaction between a stokvel and a member of thatstokvel in terms of the rules of the stokvel.

34 Section 4(2)(b) of the National Credit Act stipulates when it will be considered that parties are notdealing at arm’s length. Thus, where a company (a credit provider) makes a loan to one of itsshareholder (the consumer), it will not be considered that they are dealing at arm’s length and theNational Credit Act will therefore not apply to such a loan.

35 See s 4 of the National Credit Act.36 See s 4 read with s 6 of the National Credit Act.37 See s 6 of the National Credit Act.

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This means that lenders may charge any interest rate and other costs of creditwhen they conclude credit agreements with such small and mediumbusinesses, without having to fear that such an agreement might be declared areckless lending transaction. However, if such a business consumer with anasset value or annual turnover below R1 000 000 at the time the agreement ismade concludes a large credit agreement, (that is, any mortgage agreement ora credit transaction or signs a credit guarantee for an amount equal orexceeding R250 000), the National Credit Act will not apply to that largecredit agreement.38

5 Consumer Credit Institutions and Credit Industry RegulationOn 1 June 2006, the National Credit Act established a National Credit

Regulator39 who is responsible for the regulation of the South African creditindustry.40 The Regulator is tasked with carrying out education, creatingawareness of the consumer protection that the National Credit Act offers,research, policy development, registration of industry participants, investiga-tion of complaints, and ensuring the enforcement of the Act. It is required topromote and support the development of a fair, transparent, competitive,sustainable and accessible credit market, and must particularly address theneeds of historically disadvantaged persons, low-income persons, and remote,isolated or low-density communities. It must also monitor the availability ofcredit, pricing and market conditions, trends in access to credit andindebtedness, market conduct and competition. The National Credit Regulatoris accountable to the Minister of Trade and Industry and to Parliament for themanner in which it carries out its mandate. Furthermore, the Regulator is alsotasked with the registration of credit providers,41 credit bureaux and debtcounsellors;42 the cancellation or suspension of the registration of creditproviders, credit bureaux and debt counselors;43 dealing with complaints;promoting alternative dispute resolution; and enforcement of compliance with

38 See s 4(1)(b) of the National Credit Act.39 See http://www.ncr.org.za (last visited on 21 Jan 2008). The Micro Finance Regulatory Council’s

regulatory mandate was ended and all its assets, liabilities and staff were transferred to the NationalCredit Regulator: see item 8 of Sched 3 of the National Credit Act. Therefore, the previous CEO of theMicro Finance Regulatory Council, Mr G Davel, became the first CEO of the National Credit Regulator:see also Policy Framework for Consumer Credit op cit note 3 at 34.

40 See ss 12-25 of the National Credit Act.41 Credit providers are required by s 40(1) to register with the National Credit Regulator if they have

concluded at least 100 credit agreements to which the National Credit Act applies (other than incidentalcredit agreements); or if the total principal debt of all outstanding credit agreements concluded by thecredit provider to which the National Credit Act applies (other than incidental credit agreements)exceeds R500 000: see GN 713 in GG 28893 of 1 Jun 2006).

42 See ss 39-52 of the National Credit Act. Registered industry participants also have to pay thenecessary registration fees (initial and annual renewal) and regularly have to submit various reports,including compliance reports, to the Regulator: see, eg, GN 949 in GG 29245 of 21 Sep 2006, andss 52(6) and 70(5) of the National Credit Act, and ch 8 (regs 62-71) of the Regulations. By 31 Mar 2007,a total of 3,968 credit providers with 19,574 branches were provisionally registered, eight credit bureauxwere fully registered, while 51 debt counsellors had submitted their applications for registration: see theAnnual Report op cit note 2 at 19).

43 See ss 54-59 of the National Credit Act.


the Act. As most types of credit provider (for example, financial institutions,micro-lenders, and retailers) have to register with the Regulator, a failure toregister as a credit provider may lead to the credit agreements of the particularcredit provider being regarded as null and void. Provision is also made forProvincial Credit Regulators to be created at a later stage.44

The National Credit Act also provided for the establishment of a NationalConsumer Tribunal on 1 September 2006.45 The Tribunal is an independentbody, separate from the National Credit Regulator, with members appointedby the President. It adjudicates in a wide variety of applications and will beresponsible for hearing cases against credit providers that have contravenedthe National Credit Act. The Tribunal is also empowered to issue fines wherethat is deemed necessary. In addition to its powers to adjudicate disputesdirectly, the Tribunal also has the authority to make a consent order reflectingany resolution arrived at through an alternative forum or to issue a compliancenotice. Credit providers and consumers may appeal to the Tribunal againstdecisions of the National Credit Regulator.

6 Preventing Over-indebtedness

6.1 Consumer EducationSection 3(e)(i) of the National Credit Act provides that one of the Act’s

purposes is to protect consumers by addressing and correcting imbalances innegotiating power between consumers and credit providers, and to do that byproviding consumers with education about credit and consumer rights. TheNational Credit Regulator is responsible for increasing knowledge of thenature and dynamics of the consumer-credit industry, and to promote publicawareness of consumer-credit matters, by implementing education andinformation measures to develop public awareness of the provisions of theNational Credit Act.46 Thus, the duty of educating the consumers about credithas been bestowed upon the Regulator. Since its establishment on 1 June2006, the Regulator has been actively involved in educating consumers andcredit providers (for instance by way of placing important information on theNational Credit Regulator’s website; holding workshops and makingpresentations at conferences,47 regular communication with the industry;providing educational brochures in all eleven official languages; placingeducational adverts; and holding media interviews).48

44 See eg, ss 1 (see, in particular, the definitions of ‘credit regulator’, ‘provincial credit regulator’,and ‘applicable provincial legislation’), 14(c)(i), 37, and 38, and item 9 of Sched 3 of the NationalCredit Act.

45 See ss 26-34 of the National Credit Act. See also http://www.thenct.org.za (last visited on 21 Jan2008).

46 Section 16(1)(a) of the National Credit Act.47 For instance, the CEO, Mr Davel, delivered a keynote presentation at the 11th International

Conference on Consumer Law, held in Cape Town on 11-13 Apr 2007 by the International Associationof Consumer Law and the Centre for Business Law, College of Law, University of South Africa.

48 For details of the consumer education that has been done and a list of the awareness activities, seethe Annual Report op cit note 2 at 19-22.

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However, not all are in favour of consumer education and criticism againstconsumer-credit education has been voiced in the past: 49

‘Consumers are very unlikely ever to be able to differentiate between the real cost of differentloan products with different repayment terms and features, even if accurate disclosure isenforced on a uniform basis (which must be done). In the end, associations and perceptionswill dictate where consumers will shop. We must be realistic in terms of what we can expect ofconsumers and consumer education. What should be promoted is the role of consumer creditanalysts and independent reports by experts or regulating agencies. Such reports must receivemaximum exposure in the media. That will get competition going.Accurate and consistent disclosure is, however, a precondition for creating awareness and alsoto facilitate such research. Whether consumer education targets in terms of proposedlegislation will achieve anything is doubtful.’

Others role players, such as credit providers, consumer organisations, tradeunions, legal academics and consumers, again, feel that education andempowering consumers are vital as this will enable consumers to haveknowledge of, and take responsibility for, their credit matters as well asencouraging them to read before signing any contracts related to credit.According to them, there is a definite need for financial education and itshould start at school level and be included in the South Africa schoolcurriculum. Finances are viewed as a life skill, just like sex and Aidseducation, and it would help children to have a familiarity with money mattersat an early age. Therefore, financial education should form part of the subjectcalled ‘life skills’ currently taught at schools.50

6.2 The Prohibition of Certain Credit Marketing and AdvertisingPractices

Regarding unsolicited lending and credit offers, it has been said that51

‘[l]ike tobacco and liquor, credit is something that is best if not taken in abundance. Whilst it isessential that people should have access to it, people should not be bombarded with it whenthey do not need it. If there can be restrictions on how tobacco and liquor can be sold thenthere could also be restraints on how and when credit may be sold. Health warnings are not outof place when it comes to credit.’

Research has indicated that unsolicited credit offers cause consumers totake on more debt than they believe they should. Particularly at risk arefirst-time credit users and middle-income consumers who may be livingbeyond their means. For instance, it has been found that misleadingadvertising, unsolicited mail offerings for loans and credit, coercive salestechniques, aggressive agents and brokers, ever increasing credit-card limits,and increasing limits on store cards all play a role.52

The National Credit Act contains several limiting and prescriptiveprovisions regarding various forms and aspects of credit marketing andadvertising practices.53 For instance, credit agreements cannot be marketed onthe basis that an agreement will automatically come into existence unless the

49 See Hofmeyr, Herbstein & Gihwala Inc op cit note 6 in par 6.6.50 See Rudo Research and Training op cit note 9 at 9-10.51 See Hofmeyr, Herbstein & Gihwala Inc op cit note 6 in para 6.2.52 See the Policy Framework for Consumer Credit op cit note 3 at 30.53 See ss 74-77 of the National Credit Act.


consumer declines the offer. Furthermore, any solicitation by a credit providerfor the purpose of inducing a person to apply for credit, must include astatement with prescribed information depending on the particular type ofsolicitation. Soliciting of credit (excluding developmental credit)54 at thehome or work address of a consumer is generally prohibited, unless theconsumer specifically invited the credit provider to such address for thatpurpose.55 Certain advertising practices are also regulated by the Act and theRegulations.56 For instance, when a credit provider advertises, it must avoidany small print; there are prescriptions as to the size and position of specialconditions in an advertisement for credit. Furthermore, when an advertise-ment makes reference to a specific credit product, there must be fulldisclosure of the costs of credit, interest rates, and instalments payable.

6.3 DisclosureIn empirical research conducted by Reality Research Africa prior to the

finalisation of the National Credit Act,57 twelve groups of consumers (eachgroup consisted of eight consumers) were asked during group discussionswhat type of information they would like to have when applying for credit.All the groups responded that they would like to see a checklist setting outtheir rights and the implications of the agreement.58 They suggested thatposters against the walls of credit providers containing such informationwould be particularly helpful. They also indicated that they would prefer it ifan independent person, rather than the salesperson, could explain the contractto them.

As already mentioned, in the past only selective disclosures (basically onlythe interest rate was disclosed) by credit providers were compulsory. RealityResearch Africa’s findings also showed that consumers were not aware oftheir credit rights. Furthermore, consumers also generally did not receive a

54 Developmental credit is defined in s 10 of the National Credit Act.55 See s 75 of the National Credit Act.56 See s 76 of the National Credit Act. Regulations 21 and 22 also stipulate the exact information that

a credit provider has to display in certain advertisements when offering to supply credit (eg, when anadvertisement is placed for a specific credit product). Provision is also made for the exact form therequired information has to be in.

57 Reality Research Africa conducted research for the Department of Trade and Industry whichexplored consumer perceptions in respect of consumer credit and the process of buying on credit. Groupdiscussions were held with respondents from different income groups (ranging from the low, middle andupper income). It was decided not to place respondents from different groups together and thereforetwelve focus group discussions were convened, addressing only one specific topic or product persession. Each group had eight respondents, contained elements of all population groups, and involvedrespondents who were currently involved in one of six relevant credit areas (ie, hire purchases, payingwith credit cards, vehicle finance, store cards or accounts, home loans, and personal loans from banks orregistered micro-lenders). For reasons of cost, group discussions were held only in Gauteng. For a fulldiscussion, see Reality Research Africa op cit note 23.

58 In a different empirical market research project conducted by Rudo Research and Training (seeRudo Research and Training op cit note 9 at 9), all the respondents (eg, credit providers, consumerorganisations, trade unions, consumers and legal academics) indicated that they would like to seechecklists in credit agreements with standard variables of what had to be disclosed. The most importantvariables that were mentioned included interest rates, administration fees, credit life insurance, monthlyrepayments, and the penalties for non-payment or breach of the contract.

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copy of their credit agreement beforehand, and contracts were often ratherlengthy, leaving consumers with no time to read through them before signingthe contracts. The language used in contracts was also often too difficult forordinary consumers to understand even if they did read it. Therefore,consumers only realised the full impact of the credit agreement when theyreceived their first account. They also often felt cheated as it was not disclosedto them when they signed their credit agreements whether the interest wascharged on a monthly or an annual basis.

The National Credit Act deals with the issues relating specifically to acredit agreement, for example the disclosure that is required before anagreement may be concluded, the form or format in which such an agreementmust be cast, and the cancellation, rescission and alteration of the agreement.It also specifically states that credit agreements must be in plain andunderstandable language59 and it is to be hoped that this will assist consumerswith understanding their credit agreements better. Consumers also have theright to receive any document and information in one of the country’s elevenofficial languages.60

In terms of the National Credit Act, a credit provider must supply aconsumer with a pre-agreement disclosure statement that includes the mainfeatures of the proposed agreement and a cost quotation of the credit. Thisstatement is binding on the credit provider for five days after the presentationof the quotation. Where the agreement is a small credit agreement,61 the creditprovider must give the consumer a pre-agreement statement and a quotationin the prescribed form. Where the agreement is a large or intermediateagreement,62 the credit provider must give the consumer a pre-agreementstatement in the format of the proposed agreement or in another form,addressing the matters prescribed by the Act, and a quotation in the prescribedform, setting out the the total cost of the credit, that is, the principal debt,interest rate and other credit costs.63 A document that records a small creditagreement must contain all the information as reflected in the prescribed formset out in the Regulations, and likewise an intermediate or large credit

59 See s 64 of the National Credit Act. The National Credit Regulator may publish guidelines toestablish whether documents comply: see s 64(3).

60 Section 63(1) of the National Credit Act provides that a consumer has a right to receive anyrequired document in an official language that the consumer reads or understands, to the extent that isreasonable having regard to usage, practicality, expense, regional circumstances and the balance of theneeds and preferences of the population ordinarily served by the person required to deliver thatdocument.

61 A small credit agreement refers to a pawn transaction, or a credit facility or credit transactionwhere the credit limit or principal debt falls at or below R15 000: see s 9 of the National Credit Act; andsee also GN 713 in GG 28893 of 1 Jun 2006.

62 An intermediate credit agreement refers to a credit facility where the credit limit falls aboveR15 000, or a credit transaction where the principal debt falls between R15 000 and R250 000; and alarge credit agreement refers to a credit transaction where the principal debt in terms of that transactionfalls at or above R250 000. It must be borne in mind that a credit facility (eg, credit card) can never be alarge agreement as all credit facilities above R15 000 are classified as intermediate agreements. Allmortgage agreements regarding immovable property (eg, a mortgage bond over a house) are regarded aslarge agreements: see s 9 of the National Credit Act; and see also GN 713 in GG 28893 of 1 Jun 2006.

63 The maximum rate of interest, fees and charges that may be charged on credit agreements are setout in the National Credit Act and the Regulations: see par 6.4 below.


agreement must comply with formal and content requirements provided for inthe Regulations.

The credit provider must also deliver to the consumer, without charge, acopy of a document that records their credit agreement. It must be transmittedto the consumer in a paper form, or in a printable electronic form.

Credit providers must also now make full disclosures of all the costs of thecredit. Providers who do not comply with the disclosure provisions of the Act,risk receiving an administrative fine of either R1 000 000, or 10 per cent oftheir annual turnover during the preceding financial year, whichever is thegreater.64

However, it should be mentioned that merely ensuring that the creditinformation is disclosed in a standardised format and in plain understandablelanguage, will not itself be sufficient to ensure that consumers fullycomprehend the impact of their credit agreements. This is where consumereducation, at school and adult level, will be vital in creating a well-informedfinancial consumer.

6.4 Making Credit more AffordableIt is controversial whether or not interest rates and other non-interest costs

of credit such as initiation and service fees should be capped. Thus, it hasbeen observed that65

‘[t]o put a cap on rates requires more than one page legislation and it makes it very technicaland complex. It requires resources to administer and enforce. However, different caps fordifferent products may or may not confuse consumers even further. The further problem is thatthe ultimate cap legitimises lending at the ultimate cap and that becomes the practice. Moralhazard creeps in.’

During the credit reviewing process, the Department of Trade and Industrymandated Rudo Research and Training to conducted market research on theperceived weaknesses in the existing credit legislation. The main aim was toelicit recommendations and input on how to improve on these weaknesses soas to protect consumers in credit and micro -or personal loan transactions. Tengroup discussions and 18 in-depth face-to-face interviews were conductedduring November and December 2002. In some cases written submissionswere also received from some of the respondents. In total 42 respondents tookpart. They included representatives from credit providers, consumer organisa-tions and trade unions, as well as consumers and legal academics.66 Therespondents all agreed that interest rates had to be regulated and that this hadto be done by way of creating clear interest-rate formulas.67 Consumer groups(including government consumer desks, consumer journalists, consumerorganisations and trade unions) raised concerns about the fact that the

64 See s 151 of the National Credit Act.65 See Hofmeyr, Herbstein & Gihwala Inc op cit note 6 in par 6.12.66 See Rudo Research and Training op cit note 9. A full list of all the respondents that took part is to

be found in the addendum at 43.67 Idem at 2 and 42.

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Exemption Notice of 1999 in effect provided that interest rates for loans forless than R10 000 were uncapped . They stated that this resulted in lendersand other credit providers charging consumers, in certain instances, between103 200 per cent interest. The problem could be solved if interest rates for allloans were regulated.

In other research, also mandated by the Department of Trade and Industry,the cost, volume and allocation of consumer credit during 2003 werestudied.68 It was found that although the repealed Usury Act with its legislatedlending-rate ceiling aimed to protect consumers by providing the maximumpermissible interest rate, it was evident that in many market segments,providers regarded the cap as if it were a prescribed rate. Furthermore, despitethe existence of the usury cap, the costs of credit for consumer in variousmarket segments exceeded the usury cap rate. Even where there wascompliance with the usury cap, the cost of credit was inflated by a number ofadditional charges over and above the finance charge. Insurance products, inparticular credit life insurance, was a major source of the disparity betweenthe interest rate ceiling and the actual cost of credit. Transaction andadministrative fees also contributed to the costs. In some instances, credit lifeinsurance amounted to up to 45 per cent of the value of the product or loan.69

One of the conclusions in this report was that70

‘[t]he combination of usury cap and exemption has created problems for the provision ofconsumer credit, with the market split into those that can be profitably served (within theambit of the cap) and those that cannot. Although the cap aims to protect the most vulnerable,there is evidence to suggest that these are the individuals who suffer most from its imposition.An environment with neither a cap nor an exemption is indicated, but the study also points outthat any legislative reform of this sort is a necessary, but not sufficient, condition to address thedysfunctionality observed in the market. Any legislative reform of the cap or the exemptionmust take place in conjunction with a number of other changes.’

This research also found that the presence of the usury cap over manydecades had made many credit providers complacent when it came to theirpricing policy. In various interviews where credit providers were asked aboutthe usury cap, they indicated that without it there would be confusion.71

As mentioned earlier, the interest rates for loans which fell under theprovisions of the repealed Usury Act were capped, and in the end it wasdecided to maintain the status quo regarding the capping of interest rates.However, in an attempt to make credit more affordable for consumers, it wasdecided that the National Credit Act and its Regulations would not only placestrict caps on interest rates, but also on the other non-interest costs of creditsuch as initiation fees and service fees.72

The National Credit Act is prescriptive of the types of fee or charges that acredit provider may charge a consumer. In terms of the Act, a credit

68 See Hawkins op cit note 1: a list of the individuals (mostly representatives of credit providers)interviewed or consulted in the production of this report, may be found at 69-71.

69 Idem in par 1.3 at 1-2.70 Idem in par 1.5 at 3.71 Idem in par 8 at 66.72 For a discussion of how this will impact on loans, see Campbell op cit note 9.


agreement may not require payment by the consumer of any money or otherconsideration except the principal debt, an initiation fee, service fees, interest,the cost of credit insurance, default administration charges and collectioncosts. The Act stipulates that there are certain maximums for interest andother costs of credit that may be charged on credit agreements.73 Chapter 5 ofthe Regulations74 compliments the Act and specifically provides for themaximum allowable interest rates75 and other costs of credit (that is, servicefees76 and initiation fees77) that may be charged on credit agreements.

For instance, in terms of the Regulations the maximum ‘interest rate’ whichmay be charged for a credit agreement is calculated according to a formulawhere the reference rate (‘RR’) is the ruling South African Reserve BankRepurchase Rate as at the time that the credit agreement is entered into. Thereare also seven different types of credit (such as mortgage agreements, creditfacilities, and development credit agreements) to which different maximuminterest rates78 and initiation fees apply79 apply. The different interest ratesthat apply to the different type of credit are rather complicated to understandand it is unlikely that the average consumer will be able to do so. For instance,the maximum interest rate that may be charged for an unsecured loan is theSA RR (currently 11 per cent)80 x 2.2 + 20 per cent per annum (= 44.2 percent). To that the initiation fee (R150 per credit agreement, plus 10 per cent ofthe amount of the agreement in excess of R1 000, but never to exceedR1 000)81 and the service fees (a maximum of R50 per month) may still beadded.

The National Credit Act also codified the common-law in duplum rule.82

That rule provides that interest stops running when unpaid interest equals theoutstanding capital amount. If the total amount of unpaid interest has accruedto an amount equal to the outstanding capital sum, the defaulting debtor mustfirst start making payments on his loan again (and so decrease the interestamount), after which interest may once again accrue to an amount equal up tothe outstanding capital sum. The rule thus effectively prevents unpaid interestfrom accruing further once it reaches the amount of the unpaid capital sum.83

73 See ss 100-106 of the National Credit Act.74 See regs 39-48 of the Regulations.75 See reg 42(1).76 See reg 44.77 See reg 42(2).78 See reg 42(1).79 See reg 42(2).80 See http://www.reservebank.co.za (last visited on 7 Jan 2008).81 An initiation fee may also never exceed 15% of the principal debt: see reg 43(3) of the

Regulations.82 Section 103(5) of the National Credit Act contains the statutory rule and it provides as follows:

‘Despite any provision of the common law or a credit agreement to the contrary, the amountscontemplated in section 101(1)(b) to (g) [ie, initiation fees, service fees, interest, costs of any creditinsurance, default administration charges, and collection costs] that accrue during the time that aconsumer is in default under the credit agreement may not, in aggregate, exceed the unpaid balance ofthe principal debt under that credit agreement as at the time that the defaults occurs.’

83 For a full discussion, see M Kelly-Louw ‘Better Consumer Protection under the Statutory induplum Rule’ (2007) 19 SA Merc LJ 337.

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The in duplum rule is based on public policy, as its purpose is to protect thedebtor from exploitation by the creditor. The rule protects a debtor, who is infinancial difficulty and is unable to service his debts, from an ever-increasingaccumulation of interest. The rule prevents the over-extension of a debtor’slimited financial resources.84 It aims to provide a form of debt relief to aconsumer, rather than to prevent a consumer from becoming over-indebted inthe first place. So, technically, it should rather be viewed as a mechanism foralleviating over-indebtedness.

In a research paper that focused mainly on the potential impact of theNational Credit Act and its Regulations on access to all forms of financialservices, special attention was also devoted to the effect of the maximumprescribed interest rates and other costs of credit.85 Special attention wasgiven to the position regarding interest rate caps and usury laws in France,Germany, Switzerland, the United Kingdom, the United States and SouthAfrica. Reference was also made to work done in 2004 by the UnitedKingdom’s Department of Trade and Industry.86 It had assessed the impact ofinterest-rate caps on both access to and the pricing of credit for low-incomegroups in the United States, the United Kingdom, France, and Germany. Itfound much lower observed credit use among low-income households inmarkets with ceilings and attributed this to constrained credit options ratherthan a lack of demand. Reference was also made to research doneindependently, by the Consultative Group to Assist the Poor.87 This groupanalised the effect of interest-rate controls in almost 40 developing andtransition economies and established that in developing economies withinterest-rate ceilings, it was difficult or impossible for formal and semi-formalmicro-lenders to cover their costs, driving them out of the market orpreventing their entering it in the first place. Evidence showed thatcompetition was the single most effective way of reducing both microcreditcosts and interest rates. In many competitive markets, efficiency has improvedand microcredit interest rates have declined.

In the same research paper it was also stated that international experience inboth developed and developing financial systems showed that price controlswere not an optimal mechanism for managing the problem of the high cost ofcredit. The opinion was expressed that regulations on reckless lending anddisclosure, together with the transparency rulings of the National CreditRegulator, should suffice to promote competition and to bring rates down.Therefore, the report urged an early removal of price controls.88

84 Idem at 337-8 and the authorities cited there.85 See Goodwin-Groen op cit note 15, in particular at 9-10, 19-30, and 47-51.86 See the UK Department of Trade and Industry The Effect of Interest Rate Controls in Other

Countries (Policy Paper) (Aug 2004).87 See Brigit Helms & Reille Xavier Interest Rate Ceilings and Microfinance: The Story So Far

(Consultative Group to Assist the Poor Occasional Paper No 9, Sep 2004) (available at www.cgap.org(last visited on 13 Jan 2008)).

88 See Goodwin-Groen op cit note 15 at 9.


6.5 Preventing Reckless LendingIt has been said that over-indebtedness results from reckless lending and

borrowing, low levels of awareness, and a lack of enforcement. Also thatover-indebtedness occurs when a borrower can no longer service all his or herdebts or where the level of debt servicing is depleting the household incomeand consumption.89

The National Credit Act clearly prohibits a credit provider from enteringinto a reckless credit agreement with a prospective consumer and alsopenalises the credit provider that does enter into such an agreements.‘Reckless lending’ as a general concept is well known in countries likeAustralia, Belgium, the United Kingdom, and the United States of America.90

However, this concept was unknown in South Africa until the advent of theNational Credit Act in June 2006.

In anticipation of the reckless-lending provisions coming into operation on1 June 2007, financial institutions were soliciting credit on a huge scale fromthe general public in attempt to grant loans before these provisions came intoeffect. Consumers were bombarded with invitations from financial institutionsoffering pre-approved credit cards and loans. Many desperate consumers, whoalready found themselves in financial difficulties, fell victim to this, soincreasing their levels of over-indebtedness. However, since the NationalCredit Act came into operation, these types of solicitation and conduct fromcredit providers are either no longer permitted or strictly regulated, and it ishoped that these provisions will prevent future over-indebtedness.

In order to assist a credit provider in determining whether a consumer iscreditworthy, the National Credit Act has incorporated and defined theconcepts of ‘over-indebtedness’ and ‘reckless lending’, in particular in ss 79,80 and 81.

Credit is lent recklessly if either• the credit provider took no steps to assess the proposed consumer’s

general understanding and appreciation of the risks and costs of theproposed credit agreement, and his or her rights and obligations under theagreement; debt re-payment history for credit agreements; or his or herexisting financial means, prospects and obligations91 (that is, anassessment of whether a consumer could make the repayments); or, lastly,

89 See the Policy Framework for Consumer Credit op cit note 3 at 31.90 See Goodwin-Groen op cit note 15 at 51.91 Section 78(3) clearly provides that the phrase ‘financial means, prospects and obligations’ in this

context, with respect to a consumer or prospective consumer, includes the following:• income, or any right to receive income, regardless of the source, frequency or regularity of that

income, other than income that the consumer or prospective consumer receives, has a right toreceive, or holds in trust for another person; and

• the financial means, prospects and obligations of any other adult person within the consumer’simmediate family or household, to the extent that the consumer, or prospective consumer, and thatother person customarily share their respective financial means; and mutually bear their respectivefinancial obligations; and

• if the consumer has or had a commercial purpose for applying for or entering into a particular creditagreement, the reasonably estimated future revenue flow from that business purpose.

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whether there was a reasonable basis to conclude that any commercialpurpose may prove to be successful, if the consumer has such a purposefor applying for the credit;

or• after having conducted such an assessment, the credit provider still

entered into the credit agreement with the consumer despite the fact thatthe preponderance of information available to the credit provider indicatedthat the consumer did not generally understand or appreciate his risks,costs or obligations under the proposed credit agreement, or that enteringinto that credit agreement would make the consumer over-indebted.92

Over-indebtedness is defined as follows:93

‘A consumer is over-indebted if the preponderance of available information at the time adetermination is made indicates that the particular consumer is or will be unable to satisfy in atimely manner all the obligations under all the credit agreements to which the consumer is aparty, having regard to that consumer’s –(a) financial means, prospects and obligations;94 and(b) probable propensity to satisfy in a timely manner all the obligations under all the credit

agreements to which the consumer is a party, as indicated by the consumer’s history ofdebt repayment.’ [my emphasis]

If a debt counsellor95 has to decide whether a consumer is over-indebted, heor she must take these matters into consideration and must also furtherconsider whether the consumer’s total monthly debt payments exceed thebalance derived by deducting his or her minimum living expenses from his orher net income. The counsellor must calculate the net income by deductingfrom the gross income of the consumer, statutory and other deductions thatare made as a condition of employment. The minimum living expenses arebased upon a budget supplied by the consumer, and adjusted by the debtcounsellor with reference to the (yet to be published) guidelines issued by theNational Credit Regulator.96

The National Credit Act provides that whenever a credit agreement is beingconsidered in any court proceedings, the court may declare the creditagreement reckless. If a court declares that a credit agreement is reckless, itmay make an order:• setting aside all or part of the consumer’s obligations under that

agreement, as the court determines may be just and reasonable in thecircumstances; or

• suspending the force and effect of that credit agreement, and it may thenissue an order suspending its force and effect until a date determined by

92 See s 80(1) read with s 81(2) of the National Credit Act. Observe, however, that the provisions forreckless lending do not apply to a school loan, student loan, and an emergency loan, provided thenecessary information is reported to the National Credit Regulator: see s 78(2) of the National CreditAct, read with reg 23.

93 See s 79(1) of the National Credit Act.94 For a definition of what is meant by ‘financial means, prospects and obligations’, see s 78(3) of the

National Credit Act as quoted in n91 above.95 See the discussion of debt counsellors in par 7.1 below.96 See reg 24(7) of the Regulations.


the court, and restructuring the consumer’s obligations under any othercredit agreements, in accordance with the Act.97

The National Credit Act also provides that, if a court declares that a creditagreement is reckless, because entering into the agreement made theconsumer over-indebted,• the court must further consider whether the consumer is over-indebted at

the time of these court proceedings; and• if the court concludes that the consumer is over-indebted, the court may

make an order suspending the force and effect of that credit agreementuntil a date determined by the court; and restructuring the consumer’sobligations under any other credit agreements, in accordance with theAct.98

However, before making such an order, the court must consider theconsumer’s current means and ability to pay his or her current financialobligations that existed at the time the agreement was made, as well as theexpected date when any such obligation under a credit agreement will be fullysatisfied, assuming the consumer makes all required payments in accordancewith any proposed order.99

The National Credit Act also determines the effect of the suspension of acredit agreement.100 It provides that during the period that the force and effectof a credit agreement is suspended, the consumer is not required to make anypayment required under the agreement; no interest, fee or other charge underthe agreement may be charged to the consumer; and the credit provider’srights under the agreement, or under any law in respect of that agreement, areunenforceable, despite any law to the contrary. Furthermore, the Act alsoprovides that after the suspension of the force and effect of a credit agreementhas ended, all the respective rights and obligations of the credit provider andthe consumer under that agreement are revived, and are fully enforceableexcept to the extent that a court may order otherwise.

In order to prevent consumers from abusing the reckless-lendingprovisions, specific measures were promulgated. For instance, s 81(1)requires that when a consumer applies for a credit agreement, and while thatapplication is being considered by the credit provider, the prospectiveconsumer must fully and truthfully answer any requests for information madeby the credit provider while the credit provider is assessing whether or not togrant the credit. Furthermore, s 81(4) provides that it is a complete defence toan allegation that a credit agreement is reckless if the credit providerestablishes that the consumer failed to fully and truthfully answer anyrequests for information made by the credit provider as part of the assessmentrequired by s 81, and if a court or the Tribunal determines that the consumer’s

97 See s 83(1)-(2) of the National Credit Act.98 See s 83(1) and (3) of the National Credit Act.99 See s 83(4) of the National Credit Act.100 See s 84 of the National Credit Act.

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failure to do so materially affected the ability of the credit provider to make aproper assessment.

From this it is clear that a consumer will not be able to benefit from thereckless-lending provisions if he or she did not disclose all financialobligations when concluding the credit agreement. It is therefore simple, if theconsumer failed to disclose all the relevant information to the credit providerwhen he or she applied for the credit, that credit agreement will not bedeemed to have been granted recklessly, provided, of course, that the creditprovider did a proper assessment as required by the National Credit Act.

In an attempt to improve the ability of a credit provider to do anaffordability assessment, provisions have been included in the National CreditAct to improve and integrate the credit-information infrastructure.101 In anattempt in particular to assist credit providers not to grant credit recklessly,provision has been made for a National Credit Register of Credit Agreementsto be created in future which will contain all relevant credit informationregarding consumers. Section 69 of the Act envisages the creation of thisRegister. The section provides that the Minister of Trade and Industry mayrequire the Regulator to establish such a Register. Although this section hascome into operation, the Register will only become effective once it is createdby the National Credit Regulator and an independent auditor has ‘approvedand confirmed’ that the Register will be able to receive and compile therequired information. In other words, the ‘physical’ coming into operation ofthe Register has been delayed.102 Once the Register has been established,credit providers will be required to submit certain information (such as thename of the consumer and his or her identity number, the credit limit under acredit facility, or the principal debt outstanding under a credit agreement andthe amount of the monthly instalments payable in terms of it) to the Registerwhen they enter into new credit agreements or amend current ones. They willalso be expected to supply certain information regarding the credit agreementsthat were concluded before the Act came into operation. The creation of thisRegister will have the advantage that credit providers will be able to consult itand obtain the necessary credit information regarding a consumer and thatwill minimize the risk of credit providers granting credit to alreadyover-indebted consumers or those that might become over-indebted if morecredit is granted.

The regulation of credit bureaux by the National Credit Regulator now alsomeans that credit providers will be in a position to rely on more accuratecredit information kept by such bureaux. In the past, consumers whereblacklisted without being notified and the information kept by credit bureauxwas often incorrect. Regulations have also been issued that aim to ‘clean up’the current credit records held by credit bureaux. They also provided that aconsumer was entitled, for a certain period of time, to inspect any of his or her

101 See the Policy Framework for Consumer Credit op cit note 3 at 31.102 See item 3 of Sched 3 of the National Credit Act.


credit records free of charge, enabling him or her to check whether theexisting records were correct.103

7 Mechanisms for Alleviating Over-indebtednessPrior to the National Credit Act coming into effect, there was only one

process, apart from formal insolvency or sequestration, that over-indebtedconsumers could make use of to alleviate their position.

In terms of s 74 of the Magistrates’ Courts Act a debtor who is unable topay his or her debts may apply for an administration order104 provided thatthose debts do not exceed an amount of R50 000. Where such an applicationis granted, the debtor must make regular payments to an administrator. Thelatter is obliged to draw up a list of creditors and must pay them from theamounts received from the debtor.105 In this sense an administration order is adebt-relief measure available to some debtors who find themselves in financialdistress, and that affords them the opportunity to obtain a statutoryrescheduling of their debt sanctioned by an order of court.

In practice, an administration order is in many instances a failure, sincedebtors do not maintain regular payments. Furthermore, even if they do, mostof the payments go into the pockets of the administrators as ‘fees’ and in theend not enough is paid to creditors to reduce the debts.106 There are also no setminimum requirements that administrators have to comply with (thus, it ispossible for a micro-lender to also act as an administrator), nor is there anyregulatory body governing administrators. Moreover, the procedure also doesnot provide for a discharge of debts. An administration order lapses only oncethe costs of the administration and the listed creditors have been paid in full.In view of the fact that the Magistrates’ Court Act contains no provision forthe repayment of the debt to take place within a fixed time-limit, manydebtors remain entrapped by their debt. This is compounded by the fact thatso-called in futuro debts – that is, debts that are payable by means of futureinstalments due in terms of an existing and enforceable contract, such aspayments under a mortgage bond or credit-agreement instalments – areexcluded from the administration procedure. In the end the procedure thusamounts to nothing more than a formal rescheduling of debt.107

103 See GN R949 in GG 29245 of 21 Sep 2006.104 For a full discussion of administration orders and their shortfalls, see A Boraine ‘Some Thoughts

on the Reform of Administration Orders and Related Issues’ (2003) 36 De Jure 217 and A Boraine ‘TheReform of Aadministration Orders within a New Consumer Credit Framework’, being a paper deliveredon 11 Apr 2007 at the International Association of Consumer Law’s 11th International Conference onConsumer Law (see note 47 above).

105 It is important to point out that in futuro debts, including mortgage bonds and assets subject tocredit agreements and other in futuro debts such as micro-loans, are in principle excluded fromadministration proceedings. Therefore, a debtor must still service these debts after the granting of theadministration order.

106 Although there are regulations that try to regulate the fees to some extent, they are ofteninterpreted incorrectly.

107 See Boraine op cit note 104.

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In 2005 it was estimated that the affairs of approximately 650 000 personswere being handled by administrators and that there were about 1 200 suchadministrators in operation. Based on the limit on the amount of the debt, thedebtors involved are usually from the lower-income group and so ignorant oftheir rights and the obligations of the administrator. Notwithstanding theexistence of the National Association of Administrators, the industry was andremains largely unregulated and malpractices widespread.108

Problems experienced in practice with administration orders have promptedthe Department of Justice to implement a reform project. This also led to theSouth African Law Reform Commission appointing a Project Committeeduring 2003 to make formal proposals regarding the reform of the law relatingto administration orders. However, as the debt-restructuring orders and debtcounselling provided for in the National Credit Act and its Regulations willhave an effect on administration orders, the Project Committee has decided toplace its reform on hold until the full force of these sections and regulations ofthe Act has come to bear on the market.109

The National Credit Act now also provide indebted consumers with afurther alternative to a sequestration order. It provides for debt re-organisation(debt restructuring) and debt counselling in cases of over-indebtedness110 andfor the registration of debt counsellors with the National Credit Regulator.

Provision is made for a consumer to apply directly to a debt counsellor for areview of his or her debt or to a court so that it can refer the matter to a debtcounsellor. Debt counsellors are thus either appointed by over-indebtedconsumers or by courts. The debt counsellor must then determine whether ornot any credit agreement concluded by the consumer is reckless and mustmake the appropriate recommendation to a relevant court. Debt restructuringorders are similar to the current administration orders.

In order to become a debt counsellor, a natural person must register withthe National Credit Regulator and must, inter alia, comply with certainminimum requirements. For instance, he or she must successfully havecompleted a debt-counselling course approved and accredited by the NationalCredit Regulator, must have a minimum of two years’ working experience incertain fields (such as consumer protection, complaints resolution, consumer-advisory services; legal or para-legal services; accounting or financialservices; or a general business environment), and must demonstrate the abilityto manage his or her own finances at the time of applying for registration.111

108 See Bamu & Collier op cit note 9 at 7.109 See Boraine op cit note 104.110 In a joint project with the Department of Trade and Industry, the Micro Finance Regulatory

Council launched a pilot debt-relief programme in 2003 which served as a basis for the implementationof debt counselling and debt review as provided for in the National Credit Act: see the Annual Report opcit note 2 at 7-8.

111 See s 46 of the National Credit Act and reg 10 of the Regulations. Currently there are eightaccredited debt counsellor trainers: Damelin, the Association of University Legal Aid Institutions(‘AULAI’), You and Your Money (a NGO), the Institute of Bankers, Rudo Research and Training, theCredit Skills Training Institute, Cornerstone Performance Solutions, and Summit Financial Services: seethe Annual Report op cit note 2 at 23.


Irrespective of the amount of debts owned under all his or her creditagreements, any natural person may apply for a debt-restructuring order. Asthe application of the administration order relates to limited debts, it is thuspossible that the same consumer might be subjected to an administration orderas well as a debt-restructuring order. Debt-restructuring orders will beeffective only if all the pitfalls and problems experienced with administrationorders are properly addressed and corrected. It appears that the relevantsections and regulations of the National Credit Act do address most of these.

However, one area of concern remains the fact that no clear provision hasbeen made for the regulation of the fee structure of debt counsellors, and thatit is not clear who will be responsible for their payment. The Regulationsmerely state that a consumer has to pay R50 to the debt counsellor when he orshe applies for assistance (that is, a type of ‘application fee’).112 There is noother mention of any fees that will be payable to counsellors. The NationalCredit Act and the Regulations make provision for a counsellor to collectmoney on behalf of the consumer and to then pay it over to the consumer’screditors, but without mentioning if the counsellor is entitled to fees orcommission for doing so.113 However, the Department of Trade and Industryhas expressed the view that it is important that debt counsellors should fulfilthese functions in a non-profit environment, so that predatory practices maybe prevented. They also stressed that it was further important that funding bemade available to provide these services to consumers on a large scale. TheDepartment also stated that a significant role for Government and the NationalCredit Regulator was envisaged in this regard.114

The National Credit Regulator has indicated that the R50 application fee,mentioned above, appears to be insufficient to cover the cost of debtcounsellors and appears to have caused a resistance among debt counsellors toregister. If this fee is not increased, there may be insufficient debt-counsellingcapacity to deal with the expected number of applications from over-indebtedconsumers. The Regulator has also urged for clarity regarding themanagement of repayments once debt counselling has been done, and also onthe distribution of payments to credit providers. It has suggested that thisfunction should be performed by a so-called ‘Payment Distribution Agent’who should have the required administrative capacity to perform such afunction and may have to be independent from the process of debtcounselling. The Regulations should, therefore, be amended to cater for andregulate this function, and to provide for increased fees for debt counsellors.Apparently these concerns have been raised with the respective departmentsand the proposals for amendments are being considered.115

The National Credit Act has also drastically changed the traditional legal

112 See reg 24(1)(d) and item 2 of Sched 2 of the Regulations.113 See reg 11 of the Regulations.114 See the Policy Framework for Consumer Credit op cit note 3 at 31.115 See the Annual Report op cit note 2 at 24.

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debt-collection procedures.116 There is now a new prescribed procedure that acredit provider has to follow when it wants to collect a debt from a defaultingconsumer, and before legal action may be instituted in a court of law. Forinstance, s 129 of the National Credit Act provides that a letter of demand sentto a defaulting debtor must draw the latter’s attention to the fact that he or shehas a right to make use of various alternative dispute-resolution mechanisms(for example, the debtor may request the assistance of a debt counsellor),before the credit provider may institute legal court proceedings. As theNational Credit Act represents a drastic departure from the repealed UsuryAct and Credit Agreements Act, it will have a significant impact on SouthAfrican lower courts and will place huge demands on magistrates who willhave to interpret and apply the National Credit Act in their courts. Currently,magistrates deal with about 65 000 debt-related judgments per month.Therefore, the South African Justice College, with financial assistance fromthe United States Agency for International Development, has developed atraining manual aimed at magistrates and implemented a training programmethat started in March 2007.117

The National Credit Act also promotes the use of ombuds, and otheralternative dispute-resolution agencies. Parties to credit agreements areencouraged to seek the resolution of their disputes through mediation,conciliation or arbitration, either through provincial consumer courts, ombudsor other such agencies, before resorting to the courts.118

8 Final CommentsThere is a huge potential demand for debt-counselling assistance and it is

estimated that 300 000 South African consumers find themselves in anextreme over-indebted position, while a further million or more are potentiallydebt-stressed. It would thus appear that debt counselling has a very importantrole to play.119 In the FinMark Trust research report referred to above,researchers correctly observed that debt counsellors would provide importantsocial support, but preventing over-indebtedness is equally as important assolving the problem after the fact. Public education campaigns to promotesaving and financial literacy training have always been and remain ways inwhich over-indebtedness may be prevented.120

In addition to the caps on interest and other costs of credit, the NationalCredit Act also requires that nearly all credit providers must register with theNational Credit Regulator. Such registration brings about that credit providershave to pay high registration fees and have to report to the National Credit

116 See ss 127-133 of the National Credit Act.117 See the Annual Report op cit note 2 at 26.118 See ss 134-135 of the National Credit Act.119 See the Annual Report op cit note 2 at 8.120 See Goodwin-Groen op cit note 15 at 10.


Regulator on various matters. Research121 has shown that the increase inadministration costs for credit providers, together with the caps that have beenplaced on interest rates and other costs of credit, may have the effect of suchproviders not granting small loans to especially low-income consumers, ascredit for small high-risk loans cost more. If this holds true, these provisionsmight force low-income consumers to continue to make use of expensivecredit in the informal sector. This would clearly be an unintendedconsequence of the National Credit Act.

The introduction of appropriate mechanisms to prevent and penalisereckless lending in the National Credit Act, should have the effect of furtherreducing the practice of credit being offered to consumers who are alreadyover-indebted. Important here is the fact that the ultimate penalty for recklesslending is a suspension of the credit agreement. It may also be hoped that thedebt relief provided for in the National Credit Act will assist those who arealready unable to repay their debts.However, the effectiveness of the National Credit Act in preventingconsumers from becoming over-indebted in the first place, and providingadequate debt relief to those that already find themselves over-indebted, willclearly depend on credit providers accepting the principles and nobleobjectives that the Act seeks to achieve and on their co-operation in itsimplementation.122 Of course, the success of the National Credit Act will alsodepend on the National Credit Regulator’s ability to police and enforce iteffectively. There is already evidence indicating that the Regulator willvigorously and actively enforce the provisions of the Act.123

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121 Idem, particularly in box 3 at 50. Of particular interest here is the interview with the KuyasaFund, a Cape Town-based non-profit organisation which uses microfinance as a tool to improve housingconditions for the poor in the Western Cape. It is generally regarded as a development-microfinanceinstitution: see www.thekuyasafund.co.za (last visited on 21 Jan 2008).

122 See the Annual Report op cit note 2 at 9.123 For instance, after a number of complaints and enquiries from the public, the Regulator

investigated the affairs of Rudco Finance (Pty) Ltd. The investigation revealed that Rudco hadcontravened a number of provisions of the National Credit Act. For instance, it required consumers tomake loan repayments and make payments in respect of monthly service fees, prior to the loans havingbeen advanced, and it charged monthly service fees in excess of the R50 per month as prescribed. InAugust 2007, the National Credit Regulator therefore issued Rudco with a Compliance Notice. Thatrequired that Rudco had to cease the practice of demanding payments and service fees before advancingthe loans and also the practice of charging monthly service fees in excess of the R50 limit. The NationalCredit Regulator further instructed Rudco to submit a proposal on how it intended to reimburseconsumers for amounts received in contravention of the Act. Rudco did not object to the ComplianceNotice and indicated its willingness to co-operate. It undertook to repay the monies it had collected fromthe consumers, but failed to make the necessary repayments. However, the National Credit Regulatordid not stop there and subsequently obtained an order from the National Consumer Tribunal inNovember 2007. The Tribunal ordered Rudco to refund all affected consumers. Apparently this entailedabout 1800 consumers with repayments of some R7m. Rudco did not comply with the Tribunal orderand the Regulator then approached the High Court to obtain a liquidation order against Rudco. TheCourt ordered the provisional liquidation of Rudco with a return date in Jan 2008. The provisionalliquidation order was later made a final order of the court. For full details of this case, seehttp://www.ncr.org.za (last visited on 13 Feb 2008).

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The prevention and alleviation of consumer over-indebtedness

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