Tribunal Fines Nelspruit Lender R1 million

After finding Nelspruit lender, Akudle Kutshiyele guilty of breaching a number of National Credit Act (NCA) regulations, the National Consumer Tribunal (NCT) fined it R1 million.

The fine was imposed after the National Credit Regulator (NCR) conducted an investigation into Akudle’s lending practices. The regulator uncovered that Akudle neglected to perform affordability assessments before granting credit.

The lender also retained borrowers’ IDs and bank cards as collateral. Furthermore, after non-payment of yearly fees resulted in a lapsed registration, the lender continued to illegally extend credit.

 

Serious Contraventions

NCR Manager of the Investigations and Enforcement Department, Jacqueline Boucher said that “Continuing to trade after the lapse of their registration due to non-payment of registration fees is a serious contravention of the NCA.”

The tribunal is allowed to impose a fine of 10% of the yearly revenue or R1m, according to the National Credit Act (NCA).

“The fines are based on the seriousness of the contraventions as well as the size of the business. In this instance, the fine imposed supports the NCR’s contention that the contraventions were serious,” explained Boucher.

The NCR are unaware of how big Akudle’s loan book is or how many borrowers it serves. The lender did not provide updated yearly financial statements. All credit providers are required to register with the regulator and adhere to the Act. The amended NCA no longer exempts smaller lenders from having to register.

Akudle has a month to pay the R1m fine.

 

Justice Khosi

“We cannot speculate on their ability to pay. Should they not adhere to the orders of the NCR, the NCR will take steps to enforce the judgment, which has the same standing as an order of the High Court,” said Boucher.

Justice Khosi is the self-proclaimed managing director of the lender. Khosi denied any knowledge of the fine and said the business no longer existed, as he was in financial trouble.

Khosi failed to appear at the tribunal hearing, however he was sent the judgment, Boucher disclosed.

The NCR would be carefully observing credit providers’ compliance with the amended Act, stated Boucher.

In February, 13 credit providers countrywide were referred to the NCT by the NCR for numerous contraventions of the NCA. These violations included reckless lending and overcharging of interest.

 

Investigations, Raids and Fines

During the initial six months of the 2015 financial year, the NCR referred 44 cases against lenders to the Tribunal. This resulted in consumers being refunded millions of rands said Nomsa Motshegare, the CEO of the NCR on Tuesday, March 15.

Some of these cases involved unlawful garnishee orders on employee’s salaries to pay back debts. Consumers were refunded R67 million in total, after being overcharged for insurance coverage over the term to end-September, said Motshegare. This was at a briefing on the regulator’s activities to Parliament’s trade and industry portfolio committee.

Lewis Stores and Edgars are among the big retailers and lenders that the NCR has investigated and raided.

The Tribunal fined 9 credit providers a total of R4.4 million. While social grant and bank cards, and IDs that were unlawfully held by lenders were seized.

“Several credit providers were arrested in raids conducted in the Western Cape,” said Motshegare.

The NCR focused its investigations on occupational disability and retrenchment insurance sales to pensioners and social grant receivers. These consumers cannot claim on this type of insurance and should not be paying premiums on it. Other contraventions included reckless lending, overcharging of credit life insurance, default judgments obtained outside of the debtor’s jurisdiction, deceptive advertising and excessive fees.

 

Posted in reckless lending and tagged , , , , , .

Leave a Reply

Your email address will not be published. Required fields are marked *