includes a partnership, association or other body of persons corporate or unincorporated, and a trust if -

1.2 There appears to be no sound reason why trusts should be included or excluded depending on the number or nature of the trustees. In our experience, large trusts might have less than three trustees, or might have trustees which are themselves trusts with less than three trustees. There also appears to be no sound reason why all partnerships should be included in the definition, but not all trusts. We would therefore suggest that the qualification in respect of trusts namely the words from 'if’ onwards, be deleted.

2.1 Section 40 requires credit providers to register with the National Credit Regulator.

(a) a direct deal, where the agreement is concluded directly between the bank or financier and The consumer, or

(b) a ceded deal, where the agreement is concluded between the supplier (such as a motor dealer) and the consumer, and the rights under the agreement are immediately ceded to the bank or financier as envisaged under section 69(4). Ceded deals are well-known and common.

2.3 In the case of ceded deals involving for instance motor vehicles, the motor dealer does not retain the rights in the credit agreement on its books for more than a few minutes. Requiring such motor dealers to register as credit providers would appear to serve no real purpose and would mean that a far larger number of credit providers would have to register with the National Credit Regulator (as opposed to a limited number of banks or financiers to whom rights in agreements are ceded), with resultant increased administrative burden and more difficult control of the industry.

2.4 We would suggest that suppliers who cede their rights under credit agreements to banks or financiers immediately, be exempted from the requirement of having to register. In this regard, we suggest that the following be added at the end of section 40(1):

" ; provided that a credit provider who habitually transfers the rights under credit agreements to a bank or other financier without undue delay shall not be required to apply to he registered as a credit provider".

2.5 In the alternative, and at the very least, the Minister should be empowered to exempt persons, or categories of persons, from having to register as a credit provider.

3.1 Section 81(2) of the Bill requires a credit provider to take reasonable steps to assess, inter alia, the consumer's general understanding and appreciation of the risks and costs of the proposed credit and of the rights and obligations of a consumer under a credit agreement, as well as whether there is a reasonable basis to conclude that any commercial purpose may prove to be successful.

3.2 These obligations placed on a credit provider are vague and may be difficult to establish at a later stage, and therefore place an unreasonable burden on the credit provider.

3.3 We would suggest that the obligations on a credit provider be limited to those matters which may be objectively established, such as those provided in section 81 (2)(a)(ii) and (iii).

4.1 In terms of section 84(1)(c), whilst a credit agreement is suspended (in terms of section 83), the credit provider's rights under the agreement, or under any law in respect of that agreement, are unenforceable

4.2 This may leave the credit provider powerless to prevent damage to the goods, or may leave the goods uninsured. The credit provider's rights, as owner of the goods, to protect them appropriately, should be left intact, or if that is the intention, it should at least be made clear.

4.3 We suggest that the following words be added at the end of section 84(1 )(c), namely -

"(d) the consumer shall be obliged to return the goods which form the subject matter of the agreement, save for non-returnable goods, to the credit provider for safe custody and preservation".

5.1 The provisions of the Bill do not cater for the situation where goods are imported into the Republic as per order of the consumer, or are to be manufactured according to the requirements of the consumer. In such a situation, a binding agreement needs to be in place between the credit provider and the consumer prior to the necessary orders being placed or deposits being paid.

5.2 It will be appreciated that in such a situation, the consumer cannot be allowed to undo the agreement by way of, for instance, the cooling-off period allowed in section 121.

5.3 In addition, the credit provider is not in a position to warrant the goods against, for instance, latent defects. The consumer will generally have selected the goods on the basis of his own expertise, and, in the case of both imported and manufactured goods, the credit provider does not have the opportunity of ensuring that the goods have, for instance, no latent defects.

5.4 The Credit Agreements Act 75 of 1980, dealt with this reality in section 6(2), by exempting the operation of certain provisions of section 6(1) in respect of credit agreements in relation to imported or manufactured goods. We would suggest that the exemption was a salutary one, and should be repeated iii the Bill.

5.5 We would suggest, in this regard, that a new section 90(6) be introduced, to read as follows

"(6) The provisions of sections 90(2)(g)(ii), (h)(i) and (i) and 121 shall not apply to any credit agreement providing for the goods in Question to be imported into the Republic as per order of or be manufactured according to the requirements of the prospective consumer".

6.1 Section 92 provides for pre-agreement disclosure to a consumer and for the consumer to be provided with a quotation. Thereafter, for a period of five business days, the consumer is entitled (and the credit provider commensurately obliged) to enter into a credit agreement with the credit provider to purchase the goods on terms no more onerous than those in the quotation.

6.2 Section 92 has important implications for asset-based finance. The implications relate to all goods, but for illustration purposes we use the example of a motor vehicle. The effect of the section as it presently reads is that in the case of the sale or lease of a motor vehicle the credit provider will be required to retain the vehicle for five business days notwithstanding that another customer may wish to purchase the vehicle and the consumer to whom the quotation was provided may subsequently elect not to purchase or lease the vehicle. This could result in a situation in which the credit provider loses both sales and then has to attempt to sell the vehicle again

6.3 In the case of a direct deal (as described in paragraph 2.2(a)), the bank or financier would be obliged to purchase the vehicle, in order to ensure its availability, in anticipation of the consumer electing to enter into the credit agreement. This exposes the bank or financier to owning an asset which may not be readily resaleable thereafter, and would cause it to incur costs and suffer inconvenience in respect of aspects such as storage, insurance, and the like, with no prospect or entitlement to recover any costs from the consumer. In order to avoid these difficulties, the bank or financier may leave the vehicle in the hands of the motor dealer, but run the risk that the vehicle may in the interim be sold by the dealer to a different customer, rendering the bank or financier unable to perform under the credit agreement if it is concluded.

6.4 In a situation where a motor dealer may itself be incurring finance charges on a vehicle which it is attempting to sell, such a situation could have significant cost implications for the motor dealer

6.5 The effect of section 92 read with section 121 of the Bill is to allow a consumer five business days to consider the quotation, and then a further five business days after conclusion of the credit agreement, to terminate it. Whilst we appreciate the need for a cooling-off period (which is provided by section 121), the provisions of section 92 in effect provide the consumer with a second cooling-off period, with the aforesaid adverse implications for the bank, financier or dealer.

6.6 The purpose of the five day period provided for in section 92, appears to be, not to act as a cooling-off period for the potential consumer, but to avoid the price of the goods increasing whilst the consumer considers his options or obtains competing quotations.

6.7 The aforesaid concerns which affect the banks, financiers and deaIers may be addressed in a manner which will leave the consumer protected in the manner intended by section 92, by removing the obligation from the credit provider to hold the goods available for the five day period envisaged by section 92. We accordingly suggest that the following words be added at the end of section 92(3)(b) ", and subject to the credit provider or supplier not having entered into an agreement for the saIe or disposal of the goods in the interim".

7.1 Currently, two different insurance policies would generally apply in respect of a credit agreement and the goods which form the subject matter thereof. Firstly, there may be credit life insurance, which covers the consumer's outstanding obligations to the credit provider. Secondly, there may be comprehensive short-term cover against damage to or loss of the goods which form the subject matter of the credit agreement. This arrangement was to the mutual benefit of the bank or financier and the consumer.

7.3 To the extent that section 106 addresses the right of the consumer to choose a policy of his or her own choice, we point out that this is in any event addressed in the Short-term Insurance Act 53 of 1 998, and the Long-term Insurance Act 52 of 1998.

7.4 We would accordingly suggest that this entire section should be reconsidered, and that it should make provision for the two types of insurance policies which are currently generally in use in respect of credit agreements.

8.1 Section 116, as it reads presently, requires that the consumer sign or initial in the margin opposite a change, unless the change reduces his or her liabilities under the agreement.

8.2 The requirement is impractical, since the original agreement may well have been stored off premises and it may be inconvenient for the consumer to visit The bank's premises in order to sign or initial as required.

8.3 We would suggest that a new paragraph (c) be added to section 11 6, so that the section reads as follows

"11 6 Any change to a document recording a credit agreement, or an amended credit agreement, after it is signed by the consumer, if applicable, or delivered to the consumer, is void unless

9.1 This section does not provide specifically for the credit provider's right to claim for the depreciation of the goods (save to the extent that it is mentioned in section 1 21(41 and (5)), which is of particular importance in the case of vehicles, which depreciate substantially as soon as they leave the dealer's floor.

9.2 A credit provider's inability to claim for depreciation would therefore operate unfairly on it, particularly in the case of motor vehicles.

"(iii) depreciation of the goods to the extent that the amount thereof is not covered by (i) and (ii) above".

10.1 Section 1 25(2)(c) allows the credit provider to recover additional interest if there is early repayment of a "large agreement" and, by clear implication, not in the case of a small or intermediate agreement.

11.1 Section 129(3)(a) allows a consumer "at any time" to reinstate a credit agreement. The only limit on the time within which this may be done, is provided by section

11.2 It is undesirable that the time within which a consumer may reinstate a credit agreement should be left open-ended or should be lengthy, and that the credit provider should be put in the position where it may incur significant legal and other costs in respect of for instance attachment and execution in the interim period. The absence of a fixed time limit could lead to a great deal of uncertainty. A period of 30 calendar days, as is provided in the Credit Agreements Act 75 of 1 980, is, it is suggested, an adequate and fair and reasonable time period to enable a consumer to reinstate the credit agreement, and would be fair to all parties.