A critical assessment of credit provision governance in South Africa with a focus on balancing the rights and responsibilities of credit providers and consumers under Section 129 of the National Credit Act 34 of 2005

Batchelor, Bronwyn Le Ann https://orcid.org/0000-0001-7300-131X

Title: A critical assessment of credit provision governance in South Africa with a focus on balancing the rights and responsibilities of credit providers and consumers under Section 129 of the National Credit Act 34 of 2005
Creator: Batchelor, Bronwyn Le Ann https://orcid.org/0000-0001-7300-131X
Subject: Debtor and creditor -- South Africa
Subject: Credit control -- Law and legislation -- South Africa
Date: 2022-05
Type: Doctoral theses
Type: text
Identifier: http://hdl.handle.net/10353/26715
Identifier: vital:65967
Description: The National Credit Act of 2005 (the NCA), described as the fourth generation of consumer protection legislation in South Africa, is the product of an initiative by the Department of Trade and Industry to address the shortcomings of the third generation of consumer protection legislation, being the Usury Act 73 of 1968 and the Credit Agreements Act 75 of 1980. The NCA seeks to unify legislation and departs radically from the old dispensation. Its aims are, inter alia, to provide a fair and non-discriminatory marketplace, to prohibit unfair credit practices and reckless lending, to establish national norms and standards relating to consumer credit and to promote a consistent enforcement framework relating to consumer credit. Through enactment of the NCA the government appears to have focused on the protection of consumers through pre-enforcement procedures, prohibitions on reckless lending practices, prevention of over-indebtedness, alleviation of over indebtedness, and an array of other measures. This protection is deemed necessary due to the relative unequal bargaining power between the credit provider (provider) and the consumer at the time of conclusion of an agreement. This consumer protection has, however, sometimes come at the cost of provider protection. Despite these endeavours, there is still the inevitably common occurrence of breach of the agreement by consumers and the ensuing recovery process available to providers. The relationship between the two major role players – the provider and consumer - is the epicentre of any discussion, theory or legislative enactment pertaining to credit. This study commences with an examination of the historical background and rationale for the NCA, putting into context the rules and regulations which govern the relationship between the parties when an agreement is breached as well as the remedies and recourses that are available to the aggrieved party in terms of the NCA. The common law, which acts as a stabiliser especially when there are legislative changes, is examined in relation to preenforcement procedures, breach and the remedies as affected by the NCA. The equitable balancing of the rights and responsibilities of these two major role players is essential to the continued well-being of not only the parties but also the credit industry and economy as a whole. The most common way for individuals to purchase any large asset like a home or motor vehicle is to approach a financial institution for provision of a loan or credit agreement. To protect its interest, the financial institution would normally register a mortgage bond over the property or hold the title of the motor vehicle until all instalments have been settled. The problem arises when the consumer defaults on repayment of the loan or credit agreement. The financial institution would then be forced to institute legal proceedings to for example foreclose on the bond and repossess the property or motor vehicle. The preenforcement procedure finds itself in the centre of the tug of war between the parties in that this is the area and time that both parties require their rights and interests to be protected. The pre-enforcement procedures determine to a large extent, if properly implemented, how many agreements are seen to successful finalisation versus the alternative of those being cancelled and / or enforcement pursued through litigation by the provider. Successful implementation of agreements and repayment of debt would support a healthy credit industry and therefore, a strong economy. This is also the favoured outcome by the NCA. Section 129 of the NCA encapsulates the pre-enforcement procedure and thus determines balancing the parties’ rights and responsibilities through its interpretation and application. The section, however, would appear to fall short in that the delivery requirement of the notice is not adequately defined and has therefore resulted in many disputes, interpretations and two subsequent amendments to the section by the National Credit Amendment Act of 2014 and 2019. The purpose of this study is to critically analyse section 129 of the NCA and determine if the rights of both the consumer and provider have been equally protected, with particular reference to the burden of bringing the section 129 notice to the attention of the consumer. The question posed by all parties involved is always inevitably: Must the section 129 notice come to the actual knowledge of the consumer in order for it to be valid? The answer to this question has varied between two schools of thought. The first school of thought, being the pro-provider approach, answers the question in the negative and holds that as long as the provider has met certain delivery requirements their duty has been fulfilled whether or not the consumer actually receives the notice. The second school of thought, being the pro-consumer approach, answers the questions in the affirmative and requires the provider to carry the burden of ensuring the consumer actually receives the notice in order for it to be valid. There are numerous reasons in support of both schools of thought. It is hoped that this study will make a helpful contribution to the balanced interpretation of section 129. The study aims to provide a consistent interpretation of the section whilst balancing the rights of the consumer and provider respectively.
Description: Thesis (LLD) -- Faculty of Law, 2022
Format: computer
Format: online resource
Format: application/pdf
Format: 1 online resource (xix, 348 pages)
Format: pdf
Publisher: University of Fort Hare
Publisher: Faculty of Law
Language: English
Rights: rights holder
Rights: All Rights Reserved
Rights: Open Access

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