Incidental credit agreements

[Dave A]

Part C - Consumer’s liability, interest, charges and fees
100. Prohibited charges
101. Cost of credit
102. Fees or charges
103. Interest
104. Changes to interest, credit fees or charges
105. Maximum rates of interest, fees and charges
106. Credit insurance

Question: How much of this is not applicable to incidental credit?

[Dave A]

Application of Part C is qualified by 5. (3)(a) which states:

A person may only charge or recover a fee, charge or interest in respect of a deferred amount under an incidental credit agreement as provided for in section 101(d), (f) and (g) subject to any maximum rates of interest or fees imposed in terms of section 105

This is further qualified by 5.(3)(b) which states:

A person may only charge or recover a fee, charge or interest in respect of an unpaid amount contemplated in paragraph (a) of the definition of ‘‘incidental credit agreement’’ only if the credit provider has disclosed, and the consumer has accepted, the amount of such a fee, charge or interest, or the basis on which it may become payable, on or before the date on which the relevant goods or services were supplied.

para (a) of the defintion of "incidental credit agreement" states (read in full):

‘‘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 apply 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

Effectively, this requires that fees, charges and interest that may become due in the event of default to pay must be made known to the consumer and accepted by the consumer prior to the supply of goods or services.

[Dave A]

Cost of credit
101. (1) A credit agreement must not require payment by the consumer of any money or other consideration, except�

(d) interest, which�

(i) must be expressed in percentage terms as an annual rate calculated in the prescribed manner; and
(ii) must not exceed the applicable maximum prescribed rate determined in terms of section 105;

(f) default administration charges, which�

(i) may not exceed the prescribed maximum for the category of credit agreement concerned; and
(ii) may be imposed only if the consumer has defaulted on a payment obligation under the credit agreement, and only to the extent permitted by Part C of Chapter 6; and

(g) collection costs, which may not exceed the prescribed maximum for the category of credit agreement concerned and may be imposed only to the extent permitted by Part C of Chapter 6.


Maximum rates of interest, fees and charges
105. (1) The Minister, after consulting the National Credit Regulator, may prescribe a method for calculating�

(a) a maximum rate of interest; and

(b) the maximum fees contemplated in this Part,

applicable to each subsector of the consumer credit market, as determined by the Minister.

(2) When prescribing a matter contemplated in subsection (1), the Minister must consider, among other things�

(a) the need to make credit available to persons contemplated in section 13(a);

(b) conditions prevailing in the credit market, including the cost of credit and the optimal functioning of the consumer credit market; and

(c) the social impact on low income consumers.

(3) When establishing regulations contemplated in this section, the Minister�

(a) must establish different maximums for credit agreements within each subsector of the consumer credit market; and

(b) may prescribe the method, consistent with section 101(3), for allocating service fees between the provision of credit and the provision of related financial services, in circumstances in which a credit provider offers multiple financial services under a single agreement.