Q & A's on the National Credit Act

[duncan drennan]

Q: What type of unsolicited sales communication is allowed under the NCA?

The reason that I ask: over the past week both my wife an I have received unsolicited mail offering personal loans up to R100k (if you have a salary over R5k), from one particular bank (this bank also happens to be advertising sweet "reduce your debt" ads on TV....)

My understanding is that cold calling is prohibited, what about unsolicited offers via postal mail, or email for that matter?

[Brett Bentley]

Dave you need to distinguish what type of credit you are referring to.

If the credit granted is incidental then regardless of the type of entity the credit is granted, in terms of Section 5 of the NCA the reckless credit granting provisions do not apply.

[Dave A]

Dave you need to distinguish what type of credit you are referring to.

The entirety of Chapter 4 Part D simply does not apply to juristic persons - period - in terms of 78 (1).

78. (1) This Part does not apply to a credit agreement in respect of which the consumer is a juristic person.

Obviously the fact that the matter is a credit agreement in the first place is pertinent too, otherwise you can't invoke reckless credit protection either .

My point in that post is - under absolutely no circumstances can a juristic person enjoy the benefits of claiming reckless credit protection. This is reserved for natural persons only.

As an aside on this - the definition of a juristic person i.r.o. trusts is particularly interesting.

[Eugene]

Section 1 defines a juristic person as including a partnership, association or other body of persons, corporate or unincorporated, or a trust if there are three or more individual trustees; or the trustee is itself a juristic person but excludes a stokvel.

[Dave A]

I found it unusual that they've used a non-standard definition. There is a general principle being applied in legislative revues that seeks to standardise these sorts of common definitions.

It was the "three or more trustees" in particular that pricked my interest. I saw a suggestion somewhere that the way around the credit squeeze when buying a property was to buy it in a trust - and it mentioned two trustees!

[Eugene]

Q: What type of unsolicited sales communication is allowed under the NCA?

My understanding is that cold calling is prohibited, what about unsolicited offers via postal mail, or email for that matter?

Duncan, the required content for advertising practices is found under section 21 of the Rules under the NCA:

If an advertisement refers only to the availability of credit, and no reference is made to costs, interest rate or monthly instalment, no further disclosure of cost of credit, interest rate or monthly repayment is required.
If an advertisement discloses only the interest rate or the maximum and minimum rates where a range is applicable and no reference is made to other costs of credit, no further information has to be disclosed, but the advertisement must indicate that an initiation fee and service fee will be charged, if applicable;

Any of the following statements or phrases, or any wording that has substantially the same meaning, may not form part of any advertisement or direct solicitation for credit-
(a) "no credit checks required",
(b) "blacklisted consumers welcome";
(c) "free credit"

A direct solicitation may not contain the expressions "loan guaranteed", "pre-approved" or similar statements except when the credit granted is not subject to any credit assessment after acceptance by the consumer.

[Rebel]

When you daft the memo remember to address the issue of in duplum - would repo costs fall in under the in duplum together with costs that belong to a debt collector in term of the debt collectors costs - what about attorney and own client fees ?

[Dave A]

in duplum?

[daveob]

in duplum?

http://www.creditmanagement.co.za/?p=165

[Dave A]

So a client "neglects" to pay you R500.00 COD as arranged which now falls under incidental credit; it doesn't take much to incur over R500.00 in collection costs!

Is this for real? Because believe me, the end effect once the pain has kicked in enough is the death of any kind of small account credit. The only solution in the service industry would be "pay me first before I even start the job" - even payment on completion wouldn't cut it.