Credit and debt - you need to know your consumer rights

This Human Rights Month, you need to understand your rights as a consumers when it comes to debt and credit. Picture: Freepik

This Human Rights Month, you need to understand your rights as a consumers when it comes to debt and credit. Picture: Freepik

Published Mar 5, 2024


March is Human Rights Month, but its also serves as a reminder for people to educate themselves about their consumer rights in regards to debt and credit.

Wikus Olivier, managing director, CreditSmart Financial Service said that consumer rights according to the National Credit Act, are a vital part of a person’s broader human rights.

“It is equally important to know what you are entitled to and what your responsibilities are when it comes to your credit agreements,” Olivier said.

Just because you have certain consumer rights does not mean that you need to over utilise them.

“If you take on more debt, for example, and you know you can’t afford it, you are in for some serious trouble,” Olivier said.

Here are a few basic consumer rights to keep top of mind concerning credit obligations:

What basic consumer rights do you have?

South African consumers have the right to:

Apply for credit

The National Credit Act (NCA) states that all adult natural persons, and every juristic person or association of persons, has the right to apply for credit.

However, the Act also acknowledges the rights of banks to refuse to enter into an agreement with a consumer, as long as there are reasons for the refusal. The refusal needs to be reasonable and consistent with the law and the banks’ risk appetite.

“For example, the bank would be within its right to decline any application for a home loan based on lack of affordability,” Reana Steyn, Ombudsman for Banking Services said.

Get information that you can understand

You have the right to receive information in plain and understandable language, including an official South African language. Don’t sign any documents if you don’t fully understand or you are uncertain about the content, fine print, and terms and conditions.

Know when your credit application is rejected

Be informed when your credit application gets approved or denied, and if rejected, the reason that it has been rejected. If your credit request gets declined due to your credit profile or score, for example, you can log a dispute with the Credit Bureau. The Credit Bureau has 20 business days to sort out your query.

Disclosure of information

Never sign a blank credit agreement. Before you decide to sign a contract, ask for a pre-agreement which is binding for five business days. This quotation should contain the borrowed amount, interest amount, deposit amount (if needed), repayment period, additional charges, etc.

The confidential treatment of your personal information

Credit providers should treat client information confidentially and should only use your information for the purpose for which it was given.

By law, you can receive a free credit report on an annual basis via a registered credit bureau and you are allowed to challenge any incorrect information that you might find on the report.

Avoid reckless lending practises

Credit providers must abide by proper affordability assessment guidelines at the time of your credit application.

Credit providers

You can negotiate with your credit providers when you struggle to keep up with your payments. Another option is to seek professional assistance and apply for the NCR-recommended debt counselling or debt review.

You need to remember that communication is crucial when it comes to your creditors. Be proactive and contact your credit providers about any changes in your circumstances. A credit provider may offer you help to keep you as a client.

Calculate your debt-to-income ratio and if it reflects a red flag of over-indebtedness, then you should consider debt counselling as a potential debt relief measure and solution.

You can request reasons if your debt counselling application gets rejected. Ask for a full disclosure of the process and written disclosure of fees applicable before you apply. You should receive monthly statements from your debt counsellor or Payment Distribution Agency (PDA) during the process.

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