National Credit Regulator v Cash Converters South Africa and Others (NCT/18013/2014/140(1) NCA) [2015] ZANCT 16 (27 February 2015)

Key Facts

Issues

• The tribunal evaluated whether it could order the Third Respondent to repay consumers for lost/damaged pawned goods, referencing prior rulings that such orders require individual consumer applications.
• The tribunal assessed whether a default order could be made against the Third Respondent after confirming adequate service of application documents and reviewing necessary evidence in the absence of a response.
• The tribunal determined whether the Third Respondent engaged in prohibited conduct by failing to conduct proper affordability assessments (Section 81(2)), not maintaining necessary documentation (Regulation 55(1)(b)(vi)), using an unlawful exclusion clause (Section 99), and charging excessive fees (Section 101(1)(c)(iii) read with Regulation 44).

Holdings

• The Third Respondent used an unlawful exclusion clause to absolve liability for lost pawned goods, violating Sections 90(1) read with 90(2)(a)(i) and 90(2)(b)(ii), as well as Section 99(1)(b) of the NCA. This clause defeated the Act's purposes and failed to comply with obligations to retain consumer property.
• The Tribunal declared the Third Respondent's conduct prohibited under Section 150(a) of the NCA due to repeated contraventions of Sections 55(1)(b)(vi), 90, and 101, as well as reliance on unlawful terms to avoid liability for consumer losses.
• The Third Respondent charged administrative returned debit order fees that, when combined with monthly service fees, exceeded the prescribed maximum permissible fees under Section 101(1)(c)(iii) and Regulation 44 of the NCA. This constitutes prohibited conduct for overcharging consumers.
• The Third Respondent failed to maintain records of credit assessments, contravening Regulation 55(1)(b)(vi) and Section 81(2) of the National Credit Act (NCA). This prohibited conduct relates to the prevention of reckless credit by not assessing consumer creditworthiness.

Remedies

• An auditor report detailing consumers who paid the R57 returned debit order fee and the total amount paid must be submitted within 90 days, at the Third Respondent's cost.
• The Tribunal declared the Third Respondent's conduct to be prohibited in terms of the National Credit Act (NCA).
• The Third Respondent is required to pay a R400,000 administrative fine within 90 days for contraventions under the NCA, including failure to maintain records, excessive fees, and unlawful exclusion clauses.
• The Third Respondent must reimburse consumers identified in the auditor report for amounts paid due to excessive fees charged in violation of the NCA.
• The Third Respondent is banned from charging administrative returned debit order fees that, when combined with monthly service fees, exceed the maximum permissible fees under the NCA.
• The Third Respondent is prohibited from using the Pre-Agreement Statement and Quotation containing unlawful exclusion clauses (Part E) that absolve liability for lost or damaged pawned goods.
• The Third Respondent must provide a revised Pre-Agreement & Quotation form compliant with the NCA within 30 days of the order.

Monetary Damages

Legal Principles

• The Tribunal applied the purposive approach to interpret the National Credit Act, ensuring compliance with its objectives of protecting consumers. This included assessing whether the exclusion clause and excessive fees defeated the Act's purposes under Section 90(2)(a)(i) and proportionality of penalties under Section 151(2)(b).
• The Tribunal found that the exclusion clause in the Pre-Agreement Statement & Quotation, which limited liability for lost or damaged pledged items, was unlawful under the principle of contra proferentem. This principle interprets ambiguous contractual terms against the drafter, particularly when such terms contravene statutory obligations like Section 99 of the National Credit Act.
• The Tribunal emphasized that credit providers must act in good faith by conducting proper affordability assessments (Section 81(2)) and maintaining required documentation (Regulation 55(1)(b)(vi)). The Third Respondent's failure to do so constituted prohibited conduct under Section 150(a) of the Act.

Precedent Name

Cited Statute

Judge Name

• Ms H Devraj
• Ms D Terblanche
• Dr B Dumisa

Passage Text

• 17.4 They also conceded that the existing exclusion clause, contained in the Pre-Agreement Statement & Quotation (see Para 11.2) was unlawful; this was in breach of Section 99 of the NCA.
• 17.1 They entered into credit agreements with consumers without conducting proper affordability assessments as contemplated in the National Credit Act 2005 (the NCA). This was in contravention of Section 81(2)(a)(i), in that they failed to assess the debt repayment history of the consumers they gave credit to.
• 38.7 The Third Respondent shall pay an administrative fine of R400 000 (Four Hundred Thousand Rand) in respect of all the contraventions set forth above.