NATIONAL CREDIT BILL, 2005

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NATIONAL CREDIT BILL, 2005
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Scope

• Escalating interest
• Incidental credit
• New definitions
• Extension of the in writing requirement
• Unlawful provisions
• Technical amendments

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Escalating interest

• Escalation of interest on student loans
  prohibited
• Section 103(4)
• A credit agreement may provide for the interest
  rate to vary during the term of the agreement
  only if the variation is by fixed relationship to
  a reference rate stipulated in the agreement,
  which reference rate must be the same as that
  used by that credit provider in respect of any
  similar credit agreements currently being issued
  by it.

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Escalating interest

• In order to allow for varying interest rates on
  development credit
• 103(7) Subject to the review and approval of the
  National Credit Regulator, subsection (4) does
  not apply in respect of developmental credit
  agreements.

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Incidental credit

• Problem no difference between definition of
  credit facility and definition of incidental
  credit for continuous service agreements
• Decision to exclude and further clarify

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Incidental credit

• 4(6) Despite any other provision of this Act - 
• (a) if a consumer pays fully or partially for
  goods or services through a charge against a
  credit facility that is provided by a third
  party, the person who sells the goods or services
  must not be regarded as having entered into a
  credit agreement with the consumer merely by
  virtue of that payment and
• (b) if an agreement provides that a supplier of a
  utility or other continuous service - 
• (i) will defer payment by the consumer until the
  supplier has provided a periodic statement of
  account for that utility or other continuous
  service and
• (ii) will not impose any charge contemplated in
  section 103 in respect of any amount so deferred
  unless the consumer fails to pay the full amount
  due within at least 30 days after the date on
  which the periodic statement is delivered to the
  consumer,
• that agreement is not a credit facility within
  the meaning of section 8(3), but any overdue
  amount in terms of that agreement, as
  contemplated in  subparagraph (ii), is incidental
  credit to which this Act applies to the extent
  set out in section 5.

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Definitions

• continuous service means the supply for
  consideration of a utility or service, other than
  credit or access to credit, or the supply of such
  a utility or service combined with the supply of
  any goods that are essential for the utilization
  of that utility or service by the consumer, with
  the intent that, so long as the agreement to
  supply that utility or service remains in
  force, the supplier will make the service
  continuously available to be used, accessed or
  drawn upon - 
• (a) from time to time as determined by the
  consumer, and
• (b)  with any frequency or in any amount as
  determined, accessed, required, demanded or drawn
  upon by the consumer, subject only to any total
  use or cost limits set out in the agreement

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Definitions

• Utility means the supply to the public of an
  essential - 
• (a) commodity, such as electricity, water,
  or gas, or
• (b) service, such as waste removal, or access to
  sewage lines, telecommunication networks or any
  transportation infrastructure

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Written statements

• Requirement for written statements very
  restrictive
• Need to be more facilitative and allow for voice
  recordings

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Written statements

• Negative option marketing and opting out
  requirements
• 74(6) When entering into a credit agreement, the
  credit provider must present to the consumer a
  written statement of the following options and
  afford the consumer an opportunity to select any
  of those options
• (a) To decline the option of pre-approved annual
  credit limit increases as
• provided for in section 119(4), if the agreement
  is a credit facility and
• (7) A credit provider
• (a) must maintain a register in the prescribed
  manner and form of all options selected by
  consumers in terms of subsection (6) and
• (b) must not act in a manner contrary to an
  option selected by a consumer in terms of
  subsection (6).

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Written statements

• 124. (1) It is lawful for a consumer to provide,
  a credit provider to request or a credit
  agreement to include a written direction
  authorising an authorisation to the credit
  provider to make a charge or series of charges
  contemplated in section 90(2)(n), if such
  direction authorisation meets all the following
  conditions
• (a) The charge or series of charges may be made
  only against an asset, account, or amount that
  has been
• (i) deposited by or for the benefit of the
  consumer and held by that credit provider or that
  third party and
• (ii) specifically named by the consumer in
  writing in the authorisation
• (e) any authorisation not given in writing, must
  be recorded electromagnetically and subsequently
  reduced to writing.

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Unlawful provisions

• Input from Department of Justice through the
  State Law Advisor
• 90(2) A provision of a credit agreement is
  unlawful if -
• (k) It expresses, on behalf of the consumer -
• (vi) a consent to the jurisdiction of-
• (aa) the High Court, if the magistrate's court
  has concurrent jurisdiction or
• (bb) any court seated outside the area of
  jurisdiction of a court having concurrent
  jurisdiction and in which the consumer resides or
  works or where the goods in question (if any) are
  ordinarily kept

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National Treasury

• Omission of the dti to previously exclude
  request from NT

Act No. 37 of 2004 Financial Services Ombud Schemes Act, 2004 The amendment of subsection (1) of section 14 by the insertion after the expression Subject to section 13 and 19, of the words and the provisions of Chapters 6 and 7 of the National Credit Act, 2005
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Technical amendments

• juristic person includes a partnership,
  association or other body of persons corporate or
  unincorporated, or a trust if - 
• (a) there are three or more individual trustees,
  or
• (b) the trustee is itself a juristic person,
• but does not include a stokvel
• Other technical amendments

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