Debt Review, The National Credit Act – How It Affects The Consumer
The National Credit Act (NCA) was promulgated in 2005 and came into effect in 2007.
It aims to:
- Promote a fair and transparent credit market
- Protect consumers by extending certain basic rights to the consumer
- Regulate all credit providers, debt counsellors and credit bureaux
- Reduce and limit the cost of credit and
- Standardise the way credit is offered enabling consumer to easier compare various offerings
The National Credit Act specifies the way in which credit providers disseminate information pertaining to their agreements. Credit providers are also required to word their agreements in a simple language that the layman can understand. The act also extends to regulating the activities of credit bureaux, the type and source of information they are allowed to keep on record about consumers, how they are able to use this information and for how long this information is allowed to be kept. Critically, it stipulates that credit bureaux records are kept up to date.
Finally the act ensures that credit products are standardised throughout he industry.
Examples of credit products include:
- Bank account overdrafts
- Credit cards, garage cards
- Secured and unsecured personal loans and
- Clothing, furniture or store accounts.
- Personal loans, instalment sales, leases, pawn and discount transactions.
- Developmental credit
- Incidental credit
- Credit guarantees
The National Credit Act regulations extend to:
- Micro lenders
- Retailers such as clothing and furniture stores
- Businesses, companies, close corporations and individuals who do business on credit, provide loans, or charge interest on overdue accounts.
The NCA is lifeline for financially stressed consumers
The act has been a boon for over-indebted consumers as it affords them the opportunity, within a structured environment, and with the assistance of a debt councillor, to restructure their debt, enabling them to make more affordable monthly instalments. The primary objective of the National Credit Act being to avoid over-indebtedness of consumers and to encourage responsible lending.