Shoprite found guilty of reckless lending

Wednesday, September 6, 2017

The National Consumer Tribunal has found retailer Shoprite guilty of reckless lending, the National Credit Regulator (NCR) said on Wednesday.

The CEO of the NCR, Nomsa Motshegare, said the judgment comes following an investigation by the Credit Regulator, which revealed that the retailer entered into credit agreements with consumers without conducting a reasonable and objective assessment of consumers’ ability to afford loans.

“Some of the conduct of Shoprite that was found to be in contravention of the National Credit Act (NCA) was that Shoprite, when assessing whether a consumer could afford a loan or not, took into account unverified income of another person, such as a spouse or a life partner,” said Motshegare.

In October 2015, the NCR announced that it had referred the retailer’s two business units to the National Consumer Tribunal, which is an independent adjudicative entity.

Over and above the finding that Shoprite has committed a prohibited conduct under the NCA, the Tribunal has imposed a fine of R1 million on Shoprite.

The Tribunal has also ordered Shoprite to appoint a debt counsellor at its own costs to assess if the consumers that were mentioned in the referral are over-indebted. 

“The NCR believes that this judgment by the Tribunal reaffirms the undesirability of reckless lending in our society,” said Motshegare.

The National Consumer Tribunal derives its mandate from the National Credit Act and as such, hears all sides of a case before making a decision. A decision by the Tribunal has the same status as one made by a High Court.

The National Consumer Tribunal and the National Credit Regulator -- which is responsible for the regulation of the South African credit industry -- are entities of the Department of Trade and Industry. –

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