The National Credit Act 34 of 2005 (“NCA”) was established to protect consumers from reckless lending and over-indebtedness and aims to promote responsible borrowing and lending. Yet persons and lenders still try and circumvent the NCA, oblivious, it seems, to the consequences of their actions. 

Here are some examples:

• Some parties attempt to conclude ‘friendly’ loans with interest, which are concluded as informal loans between individuals, where interest is charged but the lender is not registered with the National Credit Regulator (“NCR”). 
• From a corporate perspective, a major corporate risk is where business loans are disguised as personal loans. Some lenders label loans as “business loans” to bypass affordability checks, even when the borrower is an individual.
• Unregistered credit providers often lend money without following the NCA-prescribed rules and processes. Such unregistered credit providers can charge excessive interest and use aggressive collection strategies not permitted by the NCA. 
• Others include ‘hidden’ fees and penalties in their transactions or implementation agreements by using complicated terms or fine print to obscure the true cost of a loan.

Section 8(4)(f) of the NCA determines that an agreement, irrespective of its form but not including an agreement contemplated in subsection (2), constitutes a credit transaction if it is any other agreement, other than a credit facility or credit guarantee, in terms of which payment of an amount owed by one person to another is deferred, and any charge, fee or interest is payable to the credit provider in respect of the agreement, or the amount that has been deferred.

In the recent case of Uys NO and Others v National Credit Regulator and Another (869/2023) [2025] ZASCA 34 (1 April 2025) the Supreme Court of Appeal (“SCA”) considered a matter where the NCR received two complaints from members of the public and initiated an investigation into the conduct of the appellant in the matter. The SCA was tasked with determining whether the impugned transactions constitute credit agreements as defined by section 8(1)(b) read together with section 8(4)(f) of the NCA. Simply put, the SCA needed to confirm whether the impugned transactions were simulated and intended to avoid the provisions of the NCA.

However, the SCA did not uphold the findings of the National Consumer Tribunal (“Tribunal”) and the full court and found that the agreements were not credit transactions as defined by the NCA. The SCA emphasised that for an agreement to fall under the NCA, it must involve a deferral of payment and the charging of interest. The SCA found that in this case, the agreements did not meet these criteria. 

As much as the provision of credit is vital in any economy, credit transactions and processes must be used wisely and within the law. 


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