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Should you kiss your money goodbye if you are not registered as a credit provider?
07 June 2019
I lent a relatively large amount to an ex-business partner of mine to help him out of some financial trouble. When I asked him to start paying the loan and interest back as per our loan agreement he told me that because I was not a registered credit provider, the loan agreement was invalid and I couldn’t claim my money back from him. Surely he can’t get of scott-free just because I was not aware that I needed to register?”

An objective of the National Credit Act (“NCA”) is to discourage the provision of credit outside its regulatory framework in order to protect vulnerable consumers and help decrease the inequality that exists between credit providers and consumers. 

Accordingly, the NCA provides that persons generally who provide credit to others, must be registered with the National Credit Regulator, with any failure to so register rendering any agreement entered into by such credit provider as void. What this in essence means is that if a credit provider was required to register and did not do so, the agreement in terms of which it provides credit will be unlawful. 

But does that leave a credit provider completely without recourse?

Our courts have held that where loan agreements have been declared illegal by virtue of the fact that the credit provider was not registered when he should have been, the credit provider could use the common law claim of unjustified enrichment to claim his money back provided the requirements for the claim are met and the credit provider acted in good faith and was not aware of the requirement to register.

The merits of each case however are different and must be treated as such. Our advice is to contact your attorney to discuss your situation and identify the avenues, such as a possible unjustified enrichment claim, you can consider to get your money back.
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