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National Credit Regulator issues a public warning against fake loan scams

January 2019

[JOHANNESBURG] The National Credit Regulator (NCR) has warned consumers to be wary of fake credit providers who attempt to entrap consumers in loan scams.

These scams typically target those who are in distressed financial circumstances and looking for a loan, using slogans such as “blacklisted” or “debt review clients welcome” says Jacqueline Peters, Manager: Investigations and Enforcement at the NCR.

The increase in these types of scams comes at a time when credit approvals have decreased and consumers are finding themselves to be financially stretched. This is the time to be more vigilant as it is in the vulnerable times that we should make wise decisions. The National Credit Act prohibits all advertisements for credit from utilising these prohibited terms and consumers should avoid engaging with any credit provider who advertises in this manner, she added.

The fake credit providers would generally use the details of legitimate credit providers and attempt to make one believe that they are endorsed by government agencies such as the NCR, one must not be misled and can look out for the typical signs.

Below is general advise for consumers to avoid scams:

Treat all unexpected calls, emails and sms messages with caution. Don’t assume they’re genuine, even if the person seems to know some basic information about you, such as your name;
Look out for the name on all e-mails, in case it is a ‘clone company’ pretending to be a real credit provider.
Do not pay any upfront fees to release your loans. The National Credit Act does not allow credit providers to request upfront payments for the release of a loan, if the ‘credit provider makes this request, do not engage further and report to the relevant authorities, such as the NCR or the SAPS;
Be aware of platforms and hidden fees included for sourcing a loan;
Don’t be pressured into acting quickly. A genuine credit provider won’t mind waiting if you want time to think and compare the costs of credit by using a quotation;
Do not engage with credit providers who do not conduct affordability assessments. Furthermore, never give false or incorrect information on a credit application about your financial affairs. Always disclose your financial obligations and living expenses fully.
Never borrow from an unregistered credit provider.

‘If the proposal is too good to be true, it usually is’.

If a consumer is unsure or in doubt about the legitimacy of the credit provider or agreement, they should contact the NCR on (011 554 2600/2700 or visit our website at www.ncr.org.za.

Issued by: The National Credit Regulator

Ends

If you have to borrow, borrow wisely!

January 2019

The festive season is over and reality has dawned that we are in a new year which is meant to at least bring all things new. Unfortunately, if consumers did not spend wisely during last year, this will mean that they will have to start the year on a tough note with taking out credit being the only option for some. Didi Sebothoma, Acting Manager: Education & Communication at the National Credit regulator (NCR) says there are many reasons why consumers might need to borrow at this time of the year. It may be because of reckless spending last year, loss of jobs, unplanned costs such as medical, death etc.

We have seen some consumers battling financially last year as the VAT increased and petrol increases making things expensive for consumers. However, statistics from the National Credit Regulator shows that the consumer credit health has slightly improved from 38.9% to 37.4% .This number signifies consumers / accounts that are three or more months in arrears.

“Consumers who need to borrow money to get by should only borrow from registered credit providers”, says Sebothoma. “They should never leave their bank cards, SASSA cards, PINs and identity documents with credit providers”, he adds. It is a criminal offence for a credit provider to take and retain consumers’ instruments. Consumers should also refuse to pay any upfront payments before they are granted a loan. They should report credit providers who charge them such fees to the National Credit Regulator.

Amongst, other things, the NCR regulates interest and fees that credit providers should charge consumers when they take out credit. There are different interest rates for different credit types and most of these are calculated using the repurchase rate (repo rate). The repo rate remains unchanged at 6.75%. For mortgage agreements, the maximum interest rate credit providers can charge a consumer is 18.75% per annum. Credit facilities which include credit cards, overdrafts and petrol cards is 20.75% per annum; unsecured credit transactions which consist mainly of personal loans is 27.75% per annum; developmental credit agreements is 33.75% per annum; short-term transactions is 5 % per month on the first loan then 3% per month on subsequent loans; other credit which includes furniture and vehicle finance is 23.75% per annum; and incidental credit is 2% per month.

Credit providers are also allowed to charge consumers an initiation fee. This is a fee charged to consumers for entering into credit agreements with credit providers. An initiation fee may never exceed 15% of the principal debt. A service fee can also be charged by the credit provider for servicing the credit agreement and it must not exceed R60 excluding VAT.

Other fees that credit providers can charge include credit life insurance which will cover the credit agreement in case the consumer dies, gets retrenched or disabled whilst they still owe the credit provider. This fee is also capped.

There is also a default administration charge which is a fee chargeable by credit providers if the consumer’s account is in arrears. It basically relates to costs incurred by credit providers in advising the consumer that their account is in arrears. Collection costs are costs incurred by a credit provider in attempting to collect outstanding or overdue debt from a consumer. They can also charge costs of an extended warranty agreement, delivery, installation, initial fueling charges, connection fees, levies or charges, taxes, license or registration fees.

Sebothoma advises consumers to get a pre-agreement statement and quotation when seeking credit as these will outline the cost of credit for the proposed agreement. “Consumers should not rush to signing anything at this point until they are clear and certain”, he adds.

He concludes by advising consumers to aim at paying off their debt and building up savings over the longer term.

ENDS

About The National Credit Regulator
The National Credit Regulator (NCR) was established as the regulator under the National Credit Act 34 of 2005 (the Act) and is responsible for the regulation of the South African credit industry. The NCR is mandated with the registration of Credit Providers, Credit Bureaus, Debt Counsellors, Payment Distribution Agents, and Alternative Dispute Resolution Agents; and monitoring their conduct in compliance with the National Credit Act as amended. The National Credit Regulator offers education and protection to consumers of credit in promotion of a South African credit market that is fair, transparent, accessible and dynamic.

For more information contact:
Media Office: This email address is being protected from spambots. You need JavaScript enabled to view it.
Or
Lebogang Selibi
(011) 554-2722
E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Credit extension seasonally surges

October 2018

Today, the National Credit Regulator (NCR) released the Consumer Credit Market Report (CCMR) and the Credit Bureau Monitor (CBM), which are based on data submitted to the NCR by registered credit providers and credit bureaus respectively. The latest edition of the reports covers credit market information up to June 2018. The total value of new credit granted increased by 8.25% quarter-on-quarter from R121.62 billion to R131.65 billion. The number of applications for credit increased by 5.79% quarter-on-quarter from 10.49 million in March 2018 to 11.10 million in June 2018.
The following were some of the most significant trends observed in terms of credit granted for the quarter ended June 2018:

The value of new mortgages granted increased by R4.78 billion (13.50%) quarter-on-quarter and by R3.34 billion (9.07%) year-on-year.
Secured credit which is dominated by vehicle finance, increased by R61.21 million (0.15%) quarter-on-quarter and by R2. 38 billion (6. 07%) year-on-year.
Credit facilities increased by R1.90 billion (11.35%) quarter-on-quarter and by R3.30 billion (21.56%) year-on year.
Unsecured credit increased by R2.77 billion (11.95%) quarter-on-quarter and by R5.94 billion (29.58%) year-on-year.

The total outstanding consumer credit balances (or gross debtors book) as at June 2018 was R1.80 trillion, representing an increase of 1.14% quarter-on-quarter and 4.76% year-on-year. The trends for outstanding balances for the quarter ended June 2018 were as follows:

Mortgages debtors book increased by R8.44 billion (0.92%) for the quarter ended June 2018 and by R33.11 billion (3.72%) year-on-year.
Secured credit debtors book increased by R3. 49 billion (0.85%) for the quarter ended June 2018 and by R23.09 billion (5.87%) year-on-year.
Credit facilities debtors book increased by R1.54 billion (0.67%) for the quarter ended June 2018 and by R6.28 billion (2.79%) year-on-year.
Unsecured credit debtors book increased by R6.01 billion (3.48%) for the quarter ended June 2018 and by R13.16 billion (7.96%) year-on-year.

Credit bureaus held records for 24.59 million credit-active consumers, which showed a decrease of 3.44% when compared to the 25.46 million in the previous quarter. Consumers classified in good standing decreased by 751,431 to 15.02 million consumers. This amounts to 61.08% of the total number of credit-active consumers, a decrease of 0.85% quarter-on-quarter and an increase of 0.17% year-on-year. The number of credit active accounts decreased from 79.08 million to 76.02 million in the quarter ended June 2018. The number of impaired accounts has decreased in absolute terms from 19.42 million (24.55%) to 19.07 million (25.08%) when compared to March 2018, a decrease of 348,729 quarter-on-quarter and 905,454 year-on-year.

The number of enquiries made on consumer credit records was 375.32 million, this was a decrease of 14.64% quarter-on-quarter and of 21.80% year-on-year. Consumer initiated enquiries accounted for 24.52 million of all enquiries, an increase of 0.94% quarter-on-quarter and 33.11% year-on-year. The number of credit reports issued to consumers decreased from 196,920 in the previous quarter to 174,378. A total 98,523 (56.50%) credit reports were issued without charge, and the remaining 75,855 (43.50%) were issued with charge. There were 32,727 disputes lodged on information held on consumer credit records for the quarter ended June 2018, an increase of 6.07% quarter-on-quarter and of 5.26% year-on-year.

Consumers battling with their debt repayments should not despair, they are encouraged not to avoid their credit providers but to approach them to assist with payment re-arrangements. In worst cases the assistance of registered debt counsellors must be sought. The debt counselling process was introduced to assist consumers who are over-indebted. Such consumers can no longer meet their debt obligation and living expenses with their income. A registered debt counsellor will assist the consumer with budget advice and assist with the debt restructuring on behalf of the consumer, says Nomsa Motshegare, CEO at the NCR. Consumers must have an income to be accepted to the debt counselling process. Their income will be used in the restructuring process with credit providers, concludes Motshegare.

Comparisons in this release- ‘quarter-on-quarter’ refers to a comparison between the March 2018 and June 2018 quarters, and ‘year-on-year’ refers to a comparison between the June 2017 and June 2018 quarters.

Issued by: The National Credit Regulator

ENDS

About The National Credit Regulator

The National Credit Regulator (NCR) was established as the regulator under the National Credit Act 34 of 2005 (the Act) and is responsible for the regulation of the South African credit industry. The NCR is mandated with the registration of Credit Providers, Credit Bureaus, Debt Counsellors, Payment Distribution Agents, and Alternative Dispute Resolution Agents; and monitoring their conduct in compliance with the National Credit Act as amended. The National Credit Regulator offers education and protection to consumers of credit in promotion of a South African credit market that is fair, transparent, accessible and dynamic.

For more information contact:

Media Office: This email address is being protected from spambots. You need JavaScript enabled to view it.
Or
Lebogang Selibi
(011) 554-2722
E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.