Interest rates offered by credit providers are regulated for different caps applicable to different categories of credit contracts, and the bank reserve repository (“RR”) is used as a reference. If a consumer is late in a credit contract and the credit provider has already started a debt enforcement procedure, the agreement may not be possible. This could encourage credit providers to initiate debt collection proceedings earlier than they would otherwise have done. A much larger number of applications for default judgments on credit contracts must now be referred to a judge instead of being dealt with by the court administrator. This will significantly increase the workload of judges and could result in much longer debt enforcement procedures, which could lead to frustration among credit providers. The decisive role of credit in the economy is explained in the policy framework of the Ministry of Trade and Industry of August 2004: the service commission is defined as a fee that can be collected regularly (usually monthly) by a credit provider in relation to the routine administrative costs associated with maintaining a credit contract. The maximum service fee in the form of regulations is R50 per month or R600 per year. All categories and sizes of credit contracts are subject to the same maximum “flat rate” tax of R50. It appears that the service commission has been standardized to simplify the application of the law, which is justified by the fact that every loan, regardless of size, must be managed.
It has been argued that consumers are often responsible for their over-indebtedness by borrowing too much money or buying too much credit. This is usually the result of economic despair and a lack of understanding of the difficulties in repaying or serving their debts. However, credit providers are often responsible for giving too much credit lightly to consumers who cannot afford to pay off their debts. One of the main objectives of the law is to combat over-indebtedness and ruthless lending. Paragraphs 78 to 88 of the Act contain detailed, extensive and extremely important provisions in this regard. The creditor must provide the consumer with a free copy of the signed credit contract (on paper or in printable electronic form). Therefore, credit cannot be considered a basic universal service, to which access to water, health care and electricity should be expanded, as well as access to water, health care and electricity. There is a greater need to reconcile access to credit with the protection of consumers, especially vulnerable people.
Small, medium and large credit contractsThe Act has categorized credit contracts into the following categories: The NCR may be called upon by the Minister to set up a single national register of outstanding credit contracts, but it has not yet done so. After creation, credit providers must provide the following information regarding each credit contract: The Usury Act regulated leasing, credit and money lending transactions. A credit provider must not use an identity card, credit or debit card, access card or PIN to obtain a credit agreement or to recover the contract. A violation of this provision is punishable.