Reckless credit under the National Credit Act : a comparative analysis

Abstract

This dissertation considers the possible impact certain requirements of the National Credit Act 34 of 2005 (hereafter NCA) has on reckless credit lending by credit providers. The dissertation will identify problem areas created by the provisions of the NCA and the impact thereof on security or partial performances linked to the credit agreement. “Reckless credit lending” used to be a new terminology introduced in the credit market to increase consumer spending, but it is currently a well-known practice in the credit industry. The NCA aims at protecting consumers, especially against present everincreasing reckless-credit practices. However, certain provisions relating to reckless credit are mostly ambiguous and vague. The NCA is silent on the development and implementation of guidelines and policies relating to the prevention of reckless credit and the consequences of such an order on security and/or performances (whether there was partial or full performance). This study will discuss the prevention and consequence of reckless credit by referring to the NCA, articles written by various authors, as well as court decisions where related concerns were addresses by the judges concerned with this issue. Although the provisions stipulated in the amended NCA improve the position of the consumer in the credit market, the legislature should have drafted certain applicable provisions with more care and detail. A more detailed draft could circumvent vagueness in particular areas of concern.