A recent ruling by the National Consumer Tribunal (NCT) has reinforced the serious consequences credit providers may face when they fail to comply with the National Credit Act (NCA). The judgment, handed down on 7 July 2026 following enforcement action by the National Credit Regulator (NCR), involved contraventions relating to reckless lending, affordability assessments, interest charges and consumer documentation.
The matter originated from tip-offs received from community members regarding the lending practices of a registered credit provider in Pietermaritzburg, KwaZulu-Natal. Following these reports, NCR inspectors conducted a scouting exercise which identified potential non-compliance, leading to a formal investigation and enforcement action.
One of the most significant findings was that credit had repeatedly been extended without conducting the required affordability assessments. Before entering into a credit agreement, a credit provider must take reasonable steps to assess whether a consumer can afford the proposed credit. Failure to do so may result in consumers being granted credit they cannot afford and the agreement being considered reckless.
The NCR also found that credit had been granted to consumers with adverse credit records and consumers under debt review. These findings highlight the importance of effective controls to identify a consumer’s credit status before extending further credit.
Additional contraventions related to the cost of credit. According to the NCR, interest exceeding 30% per month had been charged in certain instances, significantly exceeding the prescribed maximum rates applicable to short-term credit transactions.
There were also failures to provide consumers with prescribed pre-agreement statements and credit agreements. These documents are an important consumer protection measure as they disclose the terms, costs and implications of the proposed credit before consumers become contractually bound. Various registration conditions imposed by the NCR were also not complied with.
The NCT upheld the NCR’s findings and declared the conduct prohibited under the NCA. The credit provider was ordered to appoint an independent audit firm within 90 days to identify affected consumers and determine amounts overcharged for refund purposes.
In addition, the credit provider’s registration was cancelled with immediate effect and an administrative fine of R300,000 was imposed.
The outcome demonstrates that registration with the NCR alone does not constitute compliance. Credit providers must ensure that NCA requirements are incorporated into day-to-day lending activities and supported by effective systems, procedures and oversight.
The case is also a reminder that responsible lending must be embedded throughout the credit process. Affordability assessments should be properly conducted and documented, prescribed interest limits observed, consumers provided with all required documentation and appropriate controls implemented to prevent prohibited or reckless lending.
Effective compliance monitoring remains essential. Policies and procedures provide limited protection where actual business practices fail to meet regulatory requirements. Credit providers should therefore regularly test whether their lending practices, systems and controls operate as intended.
Ultimately, the ruling sends a clear message to the credit industry that compliance with the NCA must be demonstrated in practice. Reckless lending, excessive charges and failures to protect consumers can result in significant penalties, consumer refunds and, in serious cases, cancellation of a credit provider’s registration.
Consumers who believe they have been subjected to unlawful lending practices are encouraged to lodge a complaint with the NCR at complaints@ncr.org.za.