INCLUSION OF INITIATION FEES IN THE DEFERRED AMOUNT

ncrINCLUSION OF INITIATION FEES IN THE DEFERRED AMOUNT

 

 

It has come to the attention of the National Credit Regulator that some credit providers include initiation fees

in the deferred amount of unsecured and short-term loans and levy interest on the deferred amount inclusive

of the initiation fees.

 

In terms of Section 102 of the National Credit Act, an initiation fee may be included in the principal debt

deferred under an instalment agreement, a mortgage agreement, a secured loan or a lease.

Where the consumer is unable to pay an initiation fee upfront on an unsecured or short-term loan, the credit

provider must reflect the initiation fee separately on the credit agreement and not charge interest on the

initiation fee.

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New proposed sub-committees to promote the Act

ncrThe NCR has proposed a few new sub committees to manage debt review processes better

Here are the new proposed committees and their proposed functions

National Credit Amendment Act

The sub-committee was established to address
operational difficulties that come with the following
sections of the Act:
• Section 71 (i.e. end balance disputes, classification of
long-term agreements, whether court orders must be
rescinded or not and others).
• Section 86(10) (i.e. what should happen if the matter is
in court and the consumer is not making payments).
• Section 126B (i.e. process on how to indicate whether
the credit agreement has prescribed or not. This is a
requirement by various magistrates).
• Any other matter you would like to raise, which poses
operational difficulties since implementation of the Act.

Reckless lending

The sub-committee was established to clarify and review
the process to be followed in terms of Section 136(1)
of the Act when lodging complaints alleging reckless
lending with the National Credit Regulator (“the NCR”).

Joint bonds

The sub-committee was established to address
operational difficulties that comes with joint bonds in debt
review applications, considering the following:
• The inclusion or exclusion of joint bonds in an
application for debt review with reference to the
applicable marital regime governing the consumers.
• The effect of inclusion or exclusion on consumers who
are not married.
• The effect of inclusion or exclusion on the signatory
who has not applied for debt counselling.
• The effect of inclusion or exclusion on a Debt
Counselling Rules System (DCRS) proposal.
• Any other matter you would like to raise, which poses
operational difficulties on joint bonds.

Court order template

The sub-committee was established to develop a
standard and uniform debt review court order template
for the industry.

Data

The sub-committee was established to:
• Deal with data challenges relating to the
Debt Help System (DHS).
• Develop the credit reporting framework
for credit providers in line with Regulation 19(13).