Worried from Warrington wants to know when to register as a credit provider.
I am not sure as to when to register my dealership as a credit provider. We do sometimes assist customers with finance and we carry our own book.
In order to answer your question, I asked Gerrit Viviers, NCA specialist at Moonstone to shed some light on the subject.
In a recent presentation to the Portfolio Committee on Trade and Industry, the National Credit Regulator (NCR) provided some interesting statistics in relation to the consumer credit market in South Africa. According to these statistics, the non-bank vehicle financiers are responsible for 5.7% of the total debtors’ book of the country, amounting to almost R96.5 billion at 31 December 2016. Except for the ‘other credit provider’ industry type, the non-bank vehicle financiers account for the second largest share of South Africa’s total debtors’ book after Banks who are responsible for 82%.
This may explain why the NCR announced that it will be focussing on vehicle financiers’ compliance with the National Credit Act, Act 34 of 2005 (NCA) by conducting a compliance monitoring exercise, specifically looking at licensing and registration fees.
It is important for all vehicle financiers to note that on 11 May 2016, the Minister of Trade and Industry, published the new threshold for credit providers who must register with the NCR. The threshold was reduced to R0.00, meaning that all persons who enter into NCA applicable credit agreements (excluding incidental credit agreements) must register with the NCR. This includes vehicle purchase agreements such as instalment agreements and motor vehicle lease agreements (where ownership is transferred to the consumer at the end of the agreement).
The NCA provides that, where an unregistered person or institution (who is not in the process of registering with the NCR) extends credit which falls under the NCA to a consumer, are unlawful and void from the date that the agreement was entered into.
The NCR may also request the National Consumer Tribunal (NCT) to issue an administrative fine that can be as high as 10% of the respondent’s annual turnover or R1 million, whichever is greater.
The NCR and the department of trade and industry (the dti) is also in the process of amending the NCA to extend the NCR’s administrative powers to allow it to impose remedial sanctions for contraventions of the NCA, without referrals to the NCT. Should this be implemented, it will mean that the NCR may impose a fine on non-compliant entities after conducting an investigation.
If your dealership or associated companies provide any form of financial assistance to a consumer for the purchase of a motor vehicle on credit, urgently consider registering as a credit provider with the NCR as a failure to do so may have serious consequences for the sustainability of your business.
Gerrit Viviers was recently employed by Moonstone as an NCA Specialist to render NCA compliance services (including NCR registrations) to its clients. Should you have any queries, please contact Gerrit on 084 852 2003 or email at email@example.com
All the best, until next time!