Know your rights
You have rights. Even when applying for credit.
A credit agreement can take the form of a credit card, overdraft, store card, personal loan and so on.
With Human Rights Day on 21 March and World Consumer Rights Day on 15 March, it is important for consumers to be aware of their basic human rights and how these rights are applicable in the consumer market, for example, when applying for a loan. This is a great opportunity to promote and shine a light on the basic rights of all consumers. These rights must be respected and protected to avoid consumer abuse and social injustices that undermine the consumer market.
One of the most valuable pieces of consumer legislation in South Africa is the National Credit Act 34 of 2005 (“NCA”). The NCA protects a consumer who enters into a credit agreement with a credit provider, such as a bank. For example, a credit agreement can take the form of a credit card, overdraft, store card, personal loan and so on. In terms of the NCA, an adult person or business has a right to apply to a credit provider for credit. However, this is not a right or guarantee that the consumer will be granted the credit.
Can a consumer be discriminated against when applying for credit?
> For a credit provider to decide on whether a consumer qualifies for credit or not, they take all circumstances into account through various scoring methods used to assess the risk of providing the credit. This means that a credit provider may only refuse to provide credit on reasonable commercial grounds in line with its risk management and lending practices.
> However, a credit provider cannot simply refuse to provide credit solely based on the fact that the consumer is a certain age or gender.
> The NCA is very clear that a consumer may not be discriminated against as a result of his/her race, gender, age, marital status and so on. This is in line with the human right of equality protected in section 9 of the Constitution.
> This protection against discrimination applies before a credit agreement is entered into (for example, during assessments and scoring) and continues throughout the duration of the credit agreement and even after its termination (for example, when the credit provider decides on whether to seek judgment against the consumer or not).
> The NCA does provide for a reasonable ground for discrimination based on age. For example, a minor who is not yet free from the care and custody of parental control due to being under the age of 18 is not allowed to apply for credit.
Must a credit provider give reasons for its decisions?
> The NCA allows a consumer, who has been refused credit or offered a lower credit limit, a right to request written reasons for the decision made by the credit provider.
> This right is in line with the human right to access to information that is protected in section 32 of the Constitution. This human right states that everyone has the right to access to any information that is required for the exercise or protection of any rights.
Does a consumer have a right to receive information in his/her official language?
> Section 30 of the Constitution provides everyone with the right to use their own language.
> The NCA has similar provisions that provides a consumer with a right to receive any document related to the provision of credit in his/her official language.
> However, this right can be limited if it is reasonable and practical considering certain factors, such as expenses, the usage in the region and the needs of the population served by the credit provider. For example, it would be reasonable for a credit provider in a rural village in Eastern Cape to not have documents in Tshivenda.
Where can a consumer complain if his/her rights are infringed?
> In light of the above, it is interesting to see how a consumer's human rights play a role with credit applications and agreements. However, these human rights may be infringed and the consumer can lodge complaints in the following manner to resolve a dispute with a credit provider:
- Try to resolve the dispute directly with the credit provider. During this step, it is important to keep record of all communications with the credit provider, as well as any relevant reference numbers.
- If not satisfied with the outcome of the credit provider or if the credit provider does not assist within a reasonable time, such as 20 business days, the dispute can be referred to the Credit Ombud for investigation (a complaint form can be obtained on their website: https://www.creditombud. org.za/).
- Please note that the Credit Ombud only deals with disputes against credit providers that are registered as members of the Credit Ombud. A full list of its members can be obtained on their website.
- As an alternative, the dispute can directly be referred to the National Credit Regulator (“NCR”) for investigation (a complaint form can be on their website: https://ncr.org.za/index.php/departments/complaints).
A piece of history…On 15 March 1962, former US President John F. Kennedy said: “Consumers by definition include us all. They are the largest economic group, affecting and affected by almost every public and private economic decision. Yet they are the only important group… whose views are often not heard.”
Did you know… A consumer's human rights are applicable even when applying for credit.