Reckless Credit Granting

Signs of reckless credit granting that you should look out for are

Contraventions of the National Credit Act, such as unlawful garnishing or Emolument Attachment Orders (EAO)
Credit provider retains your pension card, bank card, ID document or PIN as surety
Excessive interest charges
No pre-agreement statements or quotations provided
Unlawful provisions in credit agreements. You should only pay for what you get so if anything feels unfair to you, it’s best to consult one of our debt counsellors.
Ensure that you are not paying more by purchasing a product or service on credit than you would if you were using a debit card or cash
While you are under debt review, a trustworthy credit provider will grant you a consolidation loan to help you repay your debts – beware of credit providers who grant you credit for other purposes

Steps taken to curb reckless credit granting by the National Credit Regulator

Clamped down on lenders by charging them with hefty fines, sentencing them to prison or confiscating their licences
Joined forces with the South African Police Service to conduct on-site investigations at lending institutions across South Africa
In November 2013, 76 South African lenders arrested under suspicion of reckless credit granting and 64 criminal cases opened
The National Credit Regulator have been put in power over alternative resolution dispute agents to help tackle reckless lending

Crippling negative effects of reckless credit granting

Destabilises the unsecured credit market causing more consumers to become over-indebted
Causes significant problems in collections space, making collections difficult for honest lenders who don’t employ underhanded tactics
Illegal activities of a few dishonest lenders damages the reputation of entire unsecured credit industry
If you applied for a debt re-arrangement and a credit provider enters into a credit agreement with you, it will impact any credit provider who offers you a consolidation loan when you are struggling to make repayments