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    Puzzled

    Hi Jazz again

    Telecommuncation organisations, water &electricty , organisations that provide a service , are they listed as ICA. E.G telecommnuincations company that do not levy interest on outstanding accounts are they listed as incidental credit grantors. If we however decide to levy interest t on arrears accounts or a penalty fee for late payment does this mean as ICA we would need to comply with the NCA to the full extent.
    My question is that desopite whether we charge interst or not what are we list as under the NCA.

    incidental credit agreement” means an agreement, irrespective of its form, in terms of which an account was tendered for goods or services that have been provided to the consumer, or goods or services that are to be provided to a consumer over a period of time and either or both of the following conditions

    (a) a fee, charge or interest became payable when payment of an amount charged in terms of that account was not made on or before a determined period or

    date; or apply

    (b) two prices were quoted for settlement of the account, the lower price being applicable if the account is paid on or before a determined date, and the higher

    price being applicable due to the account not having been paid by that date











    yT

  2. #2
    Silver Member Eugene's Avatar
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    Jazz, for greater clarity:

    Only certain provisions of the Act apply in respect of an incidental credit agreement (Sec 5). An "incidental credit agreement" is an agreement where a consumer was given an account for goods or services bought (or to be provided) on the following basis:

    • a fee, charge or interest becomes payable if the account is not paid on a determined date and/or
    • two prices were quoted fm settlement of the account, the higher being applicable due to the account not having been paid on time.

    A typical example is where a consumer is sent an invoice in respect of goods or services supplied, the understanding between the parties being that interest would accrue if the account is not settled within 30 days.

    The parties are deemed to have concluded an incidental credit agreement on a date that is 20 business days after
    • the supplier first charges a late payment fee or interest in respect of the account; or
    • a pre-determined higher price for full settlement of the account first becomes applicable, unless the settlement value has been paid in full before that date.

    Interest or other charges on unpaid amounts in respect of an incidental credit agreement may be charged or levied only if the amount (or basis of calculation thereof) has been agreed to by the consumer on or before the date on which the goods or services were supplied (Sec 5(3)(b)). Contracting parties do not agree to enter into an incidental credit agreement. An incidental credit agreement becomes into being by operation of the law. An incidental credit agreement is, in terms of Section 5(2), "deemed" to come into existence when a consumer has defaulted on his/her obligations for a period longer than 20 business days.

    For example
    The credit provider, a doctor, provides professional services for R2000 to the consumer. Payment is "30 days" and the invoice states, interest at 2%p.a will be charged on overdue accounts". The 30 days expires on 30 March 2007. Twenty business days after 30 March if weekend and public holidays are not calculated is 04 May 2007.

    Should the consumer pay before 30 March, no interest is payable.

    Should the consumer pay before 04 May 2007, the credit provider would still not be entitled to charge interest. The Prescribed Rate of Interest Act is not applicable because the invoice has stipulated the rate of interest.

    Should the consumer pay after 04 May 2007, eg, 30 September 2007, an "incidental credit agreement" is deemed to have come into existence and the credit provider will be entitled to charge interest at: 2% pa from 05 May - 30 September 2007.

    "Incidental" is defined in the Concise Oxford English Dictionary as "Occurring as a minor accompaniment to". It is not the intention of the parties at the time the contract was entered to charge interest. With most credit agreements under the Act the right to charge interest is one of the main if not the most important motive for entering into the contract.

    Incidental credit may be seen as the ability to charge interest at a rate higher than the Prescribed Rate of Interest but without having to comply with all the requirements of the National Credit Act.

    For example
    The credit provider, a plumber provides services for R4000 to the consumer. Payment is "30 days" and nothing is said about interest or if mentioned, nothing is said about the rate at which it is to be charged.

    The 30 days expires on 30 March. The credit provider will, relying on the Prescribed Rate of Interest Act, be able to charge interest at 15.5% pa as soon as the consumer is in mora, 31 March. No incidental agreement will come into existence because the requirements for such have not been met.

    For example
    The credit provider, a mechanic, provides services for R6000 to the consumer. Payment is "30 days" and interest for overdue amounts is agreed at 4% per month which is more than the National Credit Act maximum. This provision is unlawful and cannot be enforced unless there is compliance with the Act.

    Sections 81 to 84 and any other provisions of chapter 4 Part D relating to reckless credit does not apply to an incidental credit agreement.

    Notes.

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    Many thanks for the explaination . If we were to levy interest or any charges in respect of ICA would we need to then register with the NCA as official ICA grantors
    What we were wanting do was increase the "unpaid debit order fees that we are currently billing our subscribers

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    Silver Member Eugene's Avatar
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    Jazz - remember that one can never register as an "incidental credit provider" but only as a credit ptovider. If you were to levy interest or any fee or any charge on accounts, it would be deemed to be a credit transaction in the general sense.

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