What the NCA means to you

Good news for consumers is that the NCA has been fully implemented from 1 June. The Act mainly focuses on protecting you from reckless lending by credit providers and preventing you from overexposing yourself to debt.

Your rights

In terms of the NCA, you have the right to:

•request reasons for credit refusal;
•receive documents in plain and understandable language, and in an official language you understand;
•having all the relevant documents delivered to you;
confidentiality;
•choose your own insurance;
•six monthly statements delivered to you;
•a pre-agreement statement with all the terms and conditions, and a written quote, valid for five days, which you may accept or reject;
•only be charged fees and charges stipulated in the Act;
•debt counselling services, when you are unable to meet your repayment obligations.

Protecting you

In addition, the Act stipulates a maximum interest rate, and prohibits penalty fees when you cancel a contract, although a cancellation fee may apply.

Check your credit status

The Act also requires that credit providers register information about all credit agreements on the National Register of Credit Agreements. When you apply for credit, credit providers will use this information to determine if you will be financially capable of repaying the debt. Transunion, one of the countrys credit bureaus, offers you a free credit report in the month of your birthday, by visiting www.mycredit.co.za. This allows you to make sure your credit details are correct, so you do not run into problems when you apply for credit.

Dealing with the paperwork

The NCA will unfortunately make life a little more difficult for bond applicants, as banks are required to conduct more thorough financial checks before approving bonds. Bond applicants will have to provide full disclosure of all income and liabilities and will have to earn up to three times their monthly mortgage repayment.

In terms of income, salaried employees will have to produce evidence of earnings for the last three months, while self-employed individuals will need to prove earnings for the last six months. On the expenses and liabilities side, all credit cards, limits and repayment rates must be declared, along with details of all retail accounts and repayment schedules. Existing home loans and the rates on these must be revealed, along with details of monthly expenses for everything from domestic servants, clubs, travel expenses, rates, taxes, water, electricity and more. Where the extent of the paperwork for a home loan application was daunting before, it now has the potential of becoming quite frightening.

Empowering you

However, the Act will go some way to ensure South Africa sees a new breed of customer, empowered to understand and question their credit status, the confidentiality of their information and the credit agreement they are about to sign.