NCR Accuses Ubank of Reckless Lending

On 13 January 2015, the National Credit Regulator (NCR) referred uBank to the National Consumer Tribunal (NCT) for contravening the National Credit Act (NCA). The NCR did an investigation into uBank’s dealings and discovered that they had been lending credit recklessly by granting loans to consumers, who were already in arrears with other credit providers.

Additionally, NCR uncovered that uBank had not conducted any affordability assessments, had charged initiation fees on the principal debt of unsecured loans and, moreover, failed to provide consumers with the correct interest rates.

uBank’s History

In 1975, the company we know as uBank today was founded as Teba Cash Financial Services, a company that has been empowering mining migrant labour for more than 100 years.  Teba offered financial services to sectors of the public that were overlooked by the banking market.

The Status Quo 

Currently, 80% of uBank’s R1-billion loan book is comprised of gold and platinum miners, while the company itself is owned by Teba Trust, jointly administered by the National Union of Mineworkers (NUM) and the Chamber of Mines.

Cause and Effect 

Many of these miners are left with scarcely enough money to cover their basic living expenses, after their monthly instalments have been deducted from their accounts.  In fact, miner indebtedness has been quoted as one of the key causal factors of the notoriously violent Marikana strikes in 2012.

Conflicting Accounts

The CEO of Ubank, Luthando Vutula reacted by stating, “We want to emphasize that Ubank does not agree with the report of the National Credit Regulator.  The bank has attempted to amicably resolve the matter with the regulator, but the NCR has not been willing to actively engage us and has instead insisted that we sign their consent agreement, if not, the matter will be referred to the Tribunal.”

The Company Secretary of the National Credit Regulator, Lesiba Mashapa contradicted Vutula’s account by asserting that the NCR did in fact meet with Ubank, but ended up referring the matter to the Tribunal anyway, as no consensus could be reached.

Ubank and the NCR have yet to battle it out in court, so watch this space for updates on how this high-profile case progresses!