The National Credit Act (NCA) is a new South African law that will come into effect on 1 June, 2007, but for the average consumer the question foremost in mind is “What is the National Credit Act (NCA), what are its objectives and how does it affect me as a consumer?”

Put simply the NCA was created with the intention of regulating the credit industry in South Africa in order to protect consumers from poor credit practices. The Act creates a new regulatory body, called the National Credit Regulator; that is responsible for monitoring compliance with the Act and for educating consumers about their rights. The legislation is designed to:

1. Improve transparency
2. Prohibit unfair contractual terms and practices
3. Prohibit anti-competitive practices

The intention of the Act is to protect South African consumers against unfair and unlawful credit provision.  Broadly, the Act aims to reduce reckless credit behaviour – both by credit providers and consumers.  The NCA will apply to all new credit agreements entered into on or after 1 June 2007. The Act impacts all credit providers in this country, and they are required by law to comply with all the provisions of the NCA or they will not be allowed to offer credit to consumers.

“One of the most consumer-friendly functions that the NCA will provide is the ban on negative-option marketing i.e. marketing in which you have to provide a “no” response to offers of credit to stop future offers automatically coming through to you,” says Quinton Cronje, Head of Marketing for Clicks.  “This and the recourse that will be provided to consumers should they have disputes with credit providers, this recourse will take the form of a National Consumer Tribunal which will hear complaints from consumers about credit agreements and credit providers and mete out penalties and issue declaratory orders on behalf of the consumer.”

The Act ensures that consumers are provided with all the relevant information to make an informed decision before they enter into a credit agreement. A credit provider must provide the consumer with a quotation, showing all the relevant costs and repayment values, before they sign the agreement. The quote is valid for 5 days, during which the consumer can shop around and explore other options.

Simply, the Act places a greater responsibility on credit providers to ensure that a consumer can afford the credit before they commit to it.

For more information visit www.clicks.co.za and click on Iona Minton’s financial tips.