The Non-bank Credit Department has continued to see a rise in complaints, with 932 disputes being opened in this department this year. This represents an increase of 57% when compared to the same time in 2012.

We have performed exceptionally well in recovering money for consumers and have already passed the million rand mark, having recovered R1,3 million.

The past few months have seen a notable increase in the number of reckless lending complaints. The concept of reckless lending, including affordability assessments, was introduced by the National Credit Act as a measure to curb over-indebtedness. The Act places a legal obligation on the credit provider to ensure that when credit is granted, the consumer can actually afford it (ascertained by conducting an affordability assessment). In terms of the Act, this assessment is done to ensure the consumer is not already over-indebted and will not reach a state of over-indebtedness should the credit be granted.

A credit provider must not enter into a credit agreement without first taking reasonable steps to assess the proposed consumer’s general understanding of the risks, costs, rights and obligations involved; the consumer’s debt repayment history; and his existing financial means, prospects and obligations.

When a consumer logs a complaint and makes an allegation that reckless credit has been granted, we approach the credit provider and request a copy of the affordability assessment, together with the supporting documents that were available to the credit provider at the time the agreement was entered into. These documents usually consist of a form with the consumer’s income and expenses, as well as a copy of his credit profile, his salary advice and three months’ bank statements.

We have seen some exceptional cases where the consumer’s expenses were unreasonably and unrealistically low, recording amounts such as R30 per month for groceries for a family of four! Although legal responsibility rests on consumers to be honest when they provide their expenses, the credit provider has to assess the information reasonably and should confirm the consumer’s advices where possible, for example, by referring to the supporting documents. We believe that it is the duty of the credit provider to assess the reasonableness of consumers’ expense claims.

We have also seen an increase in the number of complaints where consumers request our assistance due to the fact that they are no longer able to afford the repayments on their credit agreements. In some of these cases the affordability assessments were not conducted properly at the time the consumer initially applied for credit. These consumers cannot afford to repay their debt due to the fact that the credit was never affordable to begin with.

Fortunately we have seen that many credit providers are willing to go above and beyond what was required of them to assist over-indebted consumers. It is unfortunate, however, that some credit providers try to place all the responsibility and blame on the consumers. The over-indebtedness facing thousands of consumers represents a problem where all the parties need to work together to find solutions.