The Practical Impact of the National Credit Act

By natashabovill, 8 October, 2010

The compliance requirements on a credit provider will depend on the category of credit agreements that a credit provider enters into. The
National Credit Act (NCA) provides for three categories of credit
agreements, namely small (R0 – R15, 0000 intermediate (R15, 001 – R249,
999) and large credit agreements (larger than R250, 000). The larger the
value of the credit granted, the more vigorous the compliance required
by the NCA.

There are a number of requirements that need to be met by the credit provider. The most note worthy being the duty to prevent the granting of
reckless credit, making certain disclosures and complying with the
reporting requirements.

Reckless credit is dealt with by sections 80 and 81 in the NCA. Before a credit provider enters into a credit agreement or increases a
loan amount, the credit provider must asses whether the consumer
understands the risks and costs of the proposed credit and whether the
consumer understands his or her rights and obligations under the credit
agreement. The consumer's debt re-payment history and existing financial
means, prospects and obligations should also be investigated and taken
into consideration when assessing the application for credit. Note that
if the consumer is married in community of property, both spouses’
information should be taken into account.

The credit provider should provide the consumer with a pre-agreement statement, a copy of the credit agreement and a statement of his/her
account. The credit agreement should not contain any unlawful previsions
as set out in the NCA and the statement of account should be delivered
at least once every three months.

If a credit provider has entered into 100 or more credit agreements or if the debt owed to the credit provider exceeds R500, 000 the credit
provider must be registered as such with the National Credit Regulator.
If a credit provider fails to register, all credit agreements entered
into with that credit provider will be unlawful and monies paid by the
consumer to the credit provider should be refunded with interest.

All registered credit providers must comply with the reporting requirements set out in the NCA. In terms of sections 62 – 68 the
following documents should be submitted:

  1. Compliance Report:
    This report should be completed on an annual basis and submitted within six months from the
    credit provider's financial year end.
  2. Statistical Return:
    This report should be completed by submitting the prescribed Form 39 on a quarterly basis (if a
    credit provider's annual disbursements exceed R15mil) or annual basis
    (if it is less than R15mil).
  3. Annual and Financial Operational Return:
    The prescribed Form 40 should be completed and submitted annually within 6
    months of the financial year end of the credit provider.
  4. Assurance Engagement:
    This should be completed annually and submitted within 6 months of the financial year
    end in accordance with the published guidelines.
  5. Annual Financial Statements:
    The annual financial statements must include the auditors/financial officer's
    report and should be completed annually and submitted within 6 months of
    the credit provider’s financial year end.

Should you require more information, please do not hesitate contact us at Tel: 021 888 6000 or e-mail: [email protected] . You can also visit our website at



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