The compliance requirements on a credit provider will depend on the category of credit agreements that a credit provider enters into. The National Credit Act (NCA) provides for three categories of credit agreements, namely small (R0 – R15, 0000 intermediate (R15, 001 – R249, 999) and large credit agreements (larger than R250, 000). The larger the value of the credit granted, the more vigorous the compliance required by the NCA.

There are a number of requirements that need to be met by the credit provider. The most note worthy being the duty to prevent the granting of reckless credit, making certain disclosures and complying with the reporting requirements.

Reckless credit is dealt with by sections 80 and 81 in the NCA. Before a credit provider enters into a credit agreement or increases a loan amount, the credit provider must asses whether the consumer understands the risks and costs of the proposed credit and whether the consumer understands his or her rights and obligations under the credit agreement. The consumer's debt re-payment history and existing financial means, prospects and obligations should also be investigated and taken into consideration when assessing the application for credit. Note that if the consumer is married in community of property, both spouses’ information should be taken into account.

The credit provider should provide the consumer with a pre-agreement statement, a copy of the credit agreement and a statement of his/her account. The credit agreement should not contain any unlawful previsions as set out in the NCA and the statement of account should be delivered at least once every three months.

If a credit provider has entered into 100 or more credit agreements or if the debt owed to the credit provider exceeds R500, 000 the credit provider must be registered as such with the National Credit Regulator. If a credit provider fails to register, all credit agreements entered into with that credit provider will be unlawful and monies paid by the consumer to the credit provider should be refunded with interest.

All registered credit providers must comply with the reporting requirements set out in the NCA. In terms of sections 62 – 68 the following documents should be submitted:

1. Compliance Report: This report should be completed on an annual basis and submitted within six months from the credit provider's financial year end.
2. Statistical Return: This report should be completed by submitting the prescribed Form 39 on a quarterly basis (if a credit provider's annual disbursements exceed R15mil) or annual basis (if it is less than R15mil).
3. Annual and Financial Operational Return: The prescribed Form 40 should be completed and submitted annually within 6 months of the financial year end of the credit provider.
4. Assurance Engagement: This should be completed annually and submitted within 6 months of the financial year end in accordance with the published guidelines.
5. Annual Financial Statements: The annual financial statements must include the auditors/financial officer's report and should be completed annually and submitted within 6 months of the credit provider’s financial year end.
   

About the Writer:

Annelene Dippenaar is an admitted attorney, practicing since 2006. She has advised various clients, including registered banks, credit providers and other listed companies on the National Credit Act 34 of 2005. Since 2010 she has been employed by Compuscan, a registered credit bureau, as legal advisor and compliance officer. Annelene obtained a BA. (Law), LLB and LLM at the University of Stellenbosch and is currently writing her doctors thesis.