The impact of the National Credit Act 34 of 2005 on credit contracts by unregistered credit providers in South Africa

Abstract

The research in this dissertation was conducted with the intention of providing an alternative viewpoint on the perceived unlawful dealings of unregistered credit providers while broadly examining the nature of the credit contractual arrangements they get into with their clients. With the National Credit Act 34 of 2005 as the core legislation, its scope is thoroughly examined in order to determine whether or not it is relevantly enforceable to the credit contracts in question, and whether it is a living or adaptable statute that can be open enough to the demands brought on by the socio-economic environment that civilians live in to the point at which the informal credit sector can be thought about in an effort to make the economy or access credit more equitable and practical. The National Credit Act requires creditors that are in the business of extending and/or granting credit to their consumers, to be registered with the National Credit Regulator. Failure to do so will result in the credit agreement being unlawful and therefore void. Consequently, section 89 will be enforced, which will cancel the credit provider’s right to reclaim the credit they have granted to consumer, or forfeit it to the state. Taking into account the merits of the legal precedents examined in this dissertation, with the history and the statistics of unregistered credit providers, an informal credit and/or financial market is therefore established. Which then compels us to re-evaluate the harsh provisions of section 89 and the impact it has on the said market. This dissertation is then aimed at shifting perspective on how the courts may deal credit contracts of this nature without harshly enforcing 89 and completely disregarding other factors that are discussed in detail in chapter 5, under the heading ‘unregistered or informal credit sectors’.”