(1) Constraining the credit provider's contractual freedom and right to limit credit risks

(2) Cost implications for credit consumers

(3) Unlawful credit agreements\

(4) Termination of credit agreements

(1) Constraining the credit provider's contractual freedom and right to limit credit risks

We support the main thrust of the Bill and acknowledge that the traditional credit industry was mainly unregulated and that necessary steps has to be taken to ensure that a more transparent and regulated market could be established. In contrast to the steps that has to be taken to provide the diversion from historical differences in the credit industry, cognisance has to be taken of certain assized uses and vested rights in the credit market that has been established for many years for various justified reasons. For instance in the past credit providers could have used contractual remedies to limit their risks by way of inserting a contractual clause in credit agreements were the consumer waived certain common law rights in cases where a breach of the credit agreement by the consumer should occur. The content of section 90(2)(c) constrains the right of credit providers to limit their risks and we therefore suggest that the grammatical composition of section 90(2)(c) be revised to the effect that consumers' rights are preserved but do not at the same time unfairly frustrate the credit providers rights to limit their exposure to credit risks. It must further be put clearly that the reference to section 90(2)(c) is only by way of example and for that matter not only section 90(2)(c) should be revised.

An integral part of the National Credit Bill consists of methods to establish mechanisms to promote the participation of disadvantaged individuals as credit consumers, while at the same time more responsibilities and obligations are obtained by credit providers to administer. Every additional administrative obligation contributes to rising cost that will eventually accumulate as a cost for the potential credit consumer. It confounds the purpose of the Bill and spells in itself a contradiction for the purpose of the Bill is to promote credit access for those individuals who were previously unable to join the credit market and at the same time constitute increased costs for the same individuals that can not afford it.

It is uncertain what the registration and renewal fees described in section 51 of the Bill will consist of, but it will contribute to an even higher cost that will eventually be forwarded to the consumer.

In terms of the Bill credit providers' are obliged to take administrative precautionary measures to ensure that credit is not recklessly provided. Otherwise they are penalized in terms of the Bill. Appropriate penalty clauses do not apply for consumers. It will entail untenable consequences and given the common law remedies we would like to see that provision is made in the Act for consumers to be penalized for submitting misleading credit applications or even the attempt to apply for credit in a misleading manner. The credit industry consists of consumers, credit providers and the various regulatory bodies and the responsibility to give effect to the provisions of the act lies with all of these participants and not with the exclusion of the consumer.

We further believe that the composition of section 127 needs adjustment. It makes provision that a consumer may give a credit provider written notice to terminate a credit agreement and return returnable goods (as defined in section 1 of the Bill) that have been attained under an instalment agreement, secured loan or lease. The credit provider then attains numerous obligations in setting out the estimated value of the goods and crediting the consumer's account with the realized amount after selling the goods. We believe that this section should be adjusted to compel credit consumers that terminate an agreement commit an act as set out above to be registered as a reckless consumer and subsequently warn credit providers so that they can take precautionary measures before entering into further credit agreements with that consumer. This specific amendment will then be in conflict with the obligation set out in section 71(5) that a credit bureau or the national credit register must expunge from their records the fact that the consumer was at default upon receipt of a clearance certificate. We believe that section 71(5) must be deleted, that a maximum threshold for goods that fall within the scope of section 127 have to be determined to prevent consumers from returning expensive assets such as motor vehicles and boats, that the credit provider's remedies under a credit agreement are not constrained and that credit records be held for a period of at least five years.

We believe that the penalties as set out in section 161 are too extravagant for the kind of transgression and that it should be revised.