The complainant concluded a loan agreement with the bank on 8 November 2011. The complainant lodged a claim with our office as he was of the view that his account had prescribed on 30 August 2020. He lodged a dispute at Experian credit bureau and raised a defence of prescription. The bank then dismissed his claim.
The bank advised our office that it reviewed the matter and could confirm that prescription did not apply. The bank contended that the complainant was not disputing the debt but was raising prescription, which can be regarded as an Acknowledgement of Debt, therefore prescription was interrupted.
We engaged the bank on the matter and advised them that we were not in agreement that when a person raises prescription as a defence, it is considered an acknowledgment of debt and therefore prescription is interrupted.
We had to draw the bank’s attention to the provisions of the NCA.
The National Act specifically prevents a Credit Provider from collecting funds on a prescribed debt. In terms of Section 126B of the NCA, Prescription is a valid defence raised in any application or demand and valid in our law:
It caters for a situation where a debt is indeed prescribed, but a debtor gets ‘trapped’ into a payment or acknowledges debt. The provision states that prescription will apply had the consumer reasonably been aware of the defence of prescription when contacted.
We therefore considered the bank’s argument flawed in law. The debt in our view had prescribed and that the bank could not continue to collect on this debt. The bank accepted our position in this regard and closed its file.
Principle: Banks must ensure that they comply with their obligations in terms of the NCA in respect of prescription. Banks are not allowed to collect on a debt that has prescribed in law.
