Credit Act

When Did The Act Come into Effect ?

The sections of the National Credit Act No. 34 of 2005 relevant to over-indebtedness and restructuring of debt come into effect on 1 June 2007.

The National Credit Act No.34 of 2005

The Act makes provision for the registration of debt-counsellors to assist over-indebted Consumers. The Act was passed into law by Parliament and signed by the President in March 2006. This aims to protect Consumers taking credit or entering into Consumer credit transactions. In addition, The Act makes provision for the control and regulation of all credit transactions, including mortgages, credit cards, overdrafts, micro-loans and pawnbroking transitions.

Key features of the National Credit Act

  • Language in credit agreements must be in simple and understandable
  • Quotes must be given on all credit agreements, and are binding for 5 days
  • Advertising and marketing must contain prescribed information on the cost of credit
  • Credit sales at a person's home or work are strictly limited
  • Reasons must provided if credit application is declined
  • Interest and fees are regulated on all agreements, including micro-loans
  • Reckless lending is prohibited
  • Debt Counseling is introduced, to enable restructuring of debts for over-indebted Consumers.

Which transactions fall under the Act?

  • Loans and other credit from banks, including mortgages, overdrafts
  • Credit cards, vehicle finance any other personal finance
  • Furniture finance, clothing accounts and any other type of credit from retailers.
  • Micro-loans and pawn transactions
  • Any other type of credit or loan provided to consumer. 

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