New credit provider registration threshold set at nil as from 11 November 2016

New credit provider registration threshold set at nil as from 11 November 2016
21 Nov 2016

Under the National Credit Act, credit providers that have a total principal debt owed to them exceeding R 500 000.00, under all outstanding credit agreements (other than incidental credit agreements), must register as a credit provider. Last month, however, the Minister of Trade and Industry, Dr Rob Davies, announced that as from 11 November 2016, the new credit provider registration threshold will be nil (R0). This means that every person or entity that trades as a credit provider is required to register as a credit provider, no matter how much credit has been provided. It is important to note that this only applies to a lender who intends to enter into multiple credit agreements and not someone providing a once-off loan.

Ministerial spokesman, Sidwell Medupe, explained that “the desired outcome is to locate, regulate and monitor all credit providers in the Republic, in order to promote responsible credit lending, to curb reckless credit lending and reduce the overindebtedness of consumers”.

The new threshold, however, will require more people to register in terms of the National Credit Act by providing the National Credit Regulator with various company documents including auditor details, credit agreements, resolutions as well as a number of registration fees. The National Consumer Tribunal may also hold people liable to pay certain administrative fines if they have not registered as a credit provider.

Credit providers must therefore ensure that they have submitted their applications to the National Credit Regulator before 11 November 2016 to avoid being penalised.

To view the Government Gazette notice click here: http://www.gov.za/sites/www.gov.za/files/39981_gon513.pdf

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)
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