Credit Agreements: Your Rights and Responsibilities

– Consumer Rights Awareness Month –

March is, not only, your human rights reminder, but also, serves as a dedicated consumer-related awareness and educational period as highlighted by the National Credit Regulator (NCR), the Credit Ombud, and various organisations.

“Consumer rights as per the National Credit Act (NCA) are, after all, an essential part of your broader human rights, BUT it is equally important to know what you are entitled to AND what your responsibilities are when it comes to your credit agreements. Remember, just because you have or are aware of a certain consumer right does not mean you must ‘over-utilise’ it. If you take on more debt, for example, and you know you can’t afford it, you are in for some serious trouble,”

Wikus Olivier, managing director here at CreditSmart Financial Services.

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

What basic CONSUMER RIGHTS do you have?

You have the right to:

• Apply for credit.
• Receive information in plain and understandable language, including an official language (that you can read and understand).
  • Don’t put pen to paper if you don’t fully grasp the info or are uncertain about the content, fine print, and terms and conditions.  
• Be informed when your credit application gets approved or denied and if rejected, be notified why.
  • If your credit request gets declined due to the reflection of your credit profile or score, for example, you can ask for the credit bureau’s contact information to log a dispute. Note: the credit bureau has 20 business days to resolve your query.
• Disclosure of information.
  • Never sign a blank credit agreement and before you decide to sign a contract, ask for a pre-agreement(binding for five business days). This quotation should contain the borrowed amount, interest amount, deposit amount (if required), repayment period, and any additional charges to mention but a few.
  • Olivier highlights: “A pre-quote can help you to negotiate better interest rates or compare quotes and ‘shop around’ for better deals. South African consumers are all too thankful to be granted the first offer they can get when they could have perhaps received a better price from another registered provider.”
• The confidential treatment of your personal information.
  • Credit providers should treat client information held confidentially and should only use your information for the purpose for which it was given.
• By law, receive a credit report for FREE each year via a registered Credit Bureau (additional copies may come at a cost) and challenge any incorrect information (when needed). VeriCred (VCCB), TransUnion, Consumer Profile Bureau (CPB), Xpert Decision Systems – XDS (via the Splendi platform), or Experian are reputable “primary credit bureaus” amongst others.
• Say “NO” to reckless lending practices.
  • Credit providers must abide by proper affordability assessment guidelines at the time of your credit application.
• Negotiate with your Credit Providers when you struggle to keep up with your payments. Or seek professional assistance and apply for the NCR-recommended programme, Debt Counselling/Debt Review.
  • Communication is crucial when it comes to your creditors. Be proactive and voice your change in circumstances. You never know what a credit provider will do to help or keep you as a client.If you have calculated your Debt-To-Income Ratio and it reflects a red flag of over-indebtedness, then Debt Counselling can be considered a potential debt relief solution.
  • Note: 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 your application, and you should receive monthly statements from your Debt Counsellor or Payment Distribution Agency (PDA) during the process.

Although you have various rights regarding credit agreements, here are RESPONSIBILITIES that you must obey as a credit-active consumer:

• Only use Credit Providers (and when experiencing over-indebtedness – Debt Counsellors) registered with the NCR. **Never leave your bank card, identity document, or bank PIN with credit providers.
• Ensure a complete and truthful financial disclosure when applying for new credit. And be honest with yourself – do some extra homework to be sure you can afford another financial obligation.
• Make monthly payments as agreed/pay your balance in full each month, avoid unnecessary debt, and use credit wisely to build a positive credit history.
• If you realise you won’t be able to meet your monthly obligations, contact your Credit Provider to try and re-arrange payments immediately.
• When considering Debt Counselling as a debt relief measure – remember that you are still liable to pay your debt (it is not a quick fix or a debt cancellation process). Regularly communicate with your Debt Counsellor and stick to your newly restructured payment plan according to the court order.

Empower yourself by understanding your consumer rights and also ensure you fulfil your credit agreement responsibilities for a secure financial future.