The National Credit Act Regarding Suretyships and Reckless Lending

Stoop, Philip N.; Kelly-Louw, Michelle

doi:10.17159/1727-3781/2011/v14i2a2559

Cited by 3 publications

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“…With regards to reckless lending, the NCA helps prevent consumers from getting into much credit and cautions the credit provider from entering into reckless lending agreements by providing sanctions for credit providers. According to Stoop and Louw (2011:2) credit providers should refrain from engaging into a credit contract without properly assessing the consumer's understanding of the risks and the cost of the proposed credit and his rights and obligations under the proposed agreement. Credit providers are further advised to disclose all relevant information to credit consumers and enforce the new and improved consumer rights set out by the NCA.…”

Section: Literature Reviewmentioning

confidence: 99%

Enactment Of The National Credit Act And Its Implication On New And Improved Borrowers Rights In South Africa

Green¹,

Sewnunan²

2015

JABR

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The National Credit Act, 2005 (NCA) was introduced to create a more stable credit market and is applicable to all credit transactions. One of the main objectives of the Act is to establish new and improved rights for credit consumers. As a result, credit providers are obliged to comply with the NCA and enforce the new and improved rights. The purpose of this research paper is to determine if the NCA has established new and improved rights for home loan borrowers. The study utilised a mixed methods approach. Using a convenience sampling technique, a sample size of 250 respondents was used. The findings of the study revealed that borrowers rights are being enforced by credit providers by maintaining confidentiality, providing information to home loan borrowers on a regular basis and, most importantly, ensuring that home loan borrowers are well informed prior to entering the home loan credit agreement.

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Section: Literature Reviewmentioning

confidence: 99%

Enactment Of The National Credit Act And Its Implication On New And Improved Borrowers Rights In South Africa

Green¹,

Sewnunan²

2015

JABR

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The National Credit Act's remedies for reckless credit in the mortgage context

Brits

2018

PER

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The National Credit Act 34 of 2005 prohibits the granting of reckless credit and also provides for certain remedies that courts can grant to consumers who have fallen victim to reckless lending practices. Depending on the circumstances, these remedies are the partial or full setting aside of the consumer's rights and obligations under the agreement; the temporary suspension of the effect of the agreement; and the restructuring of the consumer's obligations. This article investigates these remedies with a focus on the effect that they would have on a credit provider under a mortgage agreement. The argument is made that the contractual and security rights of credit providers amount to "property" for the purposes of section 25(1) of the Constitution of the Republic of |South Africa, 1996 (the property clause) and that, to some degree or another, each of these remedies involves a "deprivation" (limitation or modification) of the creditor provider's rights (property). The consequence is that, when one of these remedies is granted to a consumer, the court must tailor the remedy in such a way that the effect on the credit provider is not "arbitrary" as meant in the property clause. Therefore, the proposal is that there must be a sufficient relationship between the purpose of the remedy (to discourage reckless lending and to rectify the damage caused) and the effects thereof on the credit provider. In general, the remedy should not go further than is necessary to rectify the prejudice suffered by the consumer due to the credit provider's conduct. The formulation of the remedy should accommodate considerations such as whether and to what extent either or both parties have already performed under the agreement, and it should accordingly ensure that the consumer will not be unjustifiably enriched. The remedy should also account for the effect that it would have if the consumer is permitted to keep the property that was subject to the reckless credit agreement. The article furthermore raises doubts regarding the recent high court judgment in ABSA v De Beer 2016 3 SA 432 (GP), where all the consumer's rights and obligations under a mortgage agreement were set aside due to the credit provider's reckless conduct. Remedies like this have serious consequences and therefore it is imperative that courts carefully investigate all the effects that the order would have, so that a just and reasonable outcome is achieved. This article accordingly aims to provide some guidance with reference to the principles of constitutional property law.

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The impact of the National Credit Act, 2005 on the affordability of home loans in Pinetown

Sewnunan¹

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The National Credit Act No. 34 of 2005 (NCA) was introduced by the South African government mainly to bring about accessibility to credit markets, protect consumers from malpractices and market abuses by credit providers and reduce consumer over indebtedness. As a result, credit providers are compelled to apply stringent rules and regulations when assessing a credit consumer’s affordability prior to granting home loans. This study aims at investigating the impact of the NCA on the affordability of home loans within the Pinetown metropolitan area. The literature review presents an overall view of affordability of home loans in developed and emerging countries and also provides an in-depth explanation of factors that affect affordability of home loans in South Africa. The predominant factors, amongst others that hinder the housing market, are: an increase in house prices; elevated interest rates and household debt which include inflation, transportation cost and low wage increase. A mixed methods approach was utilized for the research, analyzing both quantitative and qualitative data. Respondents (home loan borrowers) completed a questionnaire by indicating if assessments were conducted in terms of their affordability prior to the approval of their home loan and their view on the impact that the NCA had on their home loan. The data suggested strongly that credit providers had conducted proper credit and affordability assessments prior to granting home loans and that most home loan borrowers’ level of debt had remained stable since acquiring their home loans as they continue to meet their debts. An overall analysis revealed that the application of the NCA had a positive impact on the affordability of home loans in the research area and that compliance with NCA, when granting credit, resulted in the reduction of reckless lending, a decline in the level of consumer indebtedness and a reduction in payment default.

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The National Credit Act Regarding Suretyships and Reckless Lending

Cited by 3 publications

References 0 publications

Enactment Of The National Credit Act And Its Implication On New And Improved Borrowers Rights In South Africa

Enactment Of The National Credit Act And Its Implication On New And Improved Borrowers Rights In South Africa

The National Credit Act's remedies for reckless credit in the mortgage context

The impact of the National Credit Act, 2005 on the affordability of home loans in Pinetown

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