National Credit Act

Until recently, the two most important Acts governing credit law in South Africa were the Usury Act 73 of 1968 and the Credit Agreements Act 75 of 1980. However, in June 2006, these two Acts were repealed to make way for the National Credit Act 35 of 2005. The Act codifies a number of basic rights that the consumer has with regard to the credit market. In the past, some consumers, especially the illiterate, were being unjustifiably exploited. This was due to the complicated nature of credit agreements, which often resulted in individuals entering into credit agreements with a large business and being rendered defenceless. Individuals often found themselves in an unequal bargaining position vis-à-vis the business or legal person with whom the contract was concluded. The South African population consists, predominately, of low-income earners who have not had recourse to channels of credit-granting, other than micro-financiers. These micro-financiers have earned themselves a negative market reputation for over-pricing debt repayments and capitalising on this vulnerable market. This has resulted in a large number of consumers being heavily over indebted and unable to service their monthly debt repayments.

Some of the principle objectives of the Act are:

  • To promote a fair and non-discriminating marketplace for the access of credit;
  • To prohibit unfair practices;
  • To promote responsible credit-granting practices by credit providers;
  • To prohibit reckless credit-granting;
  • To provide for the general regulation of consumer credit and improved standards of consumer information;
  • To promote Black Economic Empowerment and ownership within the consumer credit industry;
  • To provide for debt restructuring in cases of over-indebtedness;
  • To establish national norms and standards relating to consumer credit;
  • To establish the National Credit Regulator;
  • To establish the National Consumer Tribunal.

To view the complete National Credit Act, please download the Act below:

National Credit Act