Publications
Partners
Cape Town – Just step into a Pep store and bring along your ID, Beeld reported on Friday.
This is how the micro lender Southern View Finance UK, trading under the trade name Capfin, advertises loans to consumers.
The National Credit Regulator (NCR) is of the opinion, however, that this approach is a transgression of the National Credit Act, because no proof of income is requested.
Capfin is a trade mark, which was owned by the Pepkor Group. After Pepkor decided to closed down the micro lending business it operated under this trade mark, Southern View Finance, the trade mark was bought by Southern View Finance UK.
Southern View Finance Ltd is a wholly owned subsidiary of Southern View Finance Ltd, which is listed overseas.
In SA consumers can apply for its loans in Pep and Ackermans stores.
The company receives between 100 000 and 200 000 applications for credit a month.
The NCR issued a compliance order to Southern View Finance UK (trading as Capfin) this week for transgressing the National Credit Act.
This is because the NCR claims Capfin does not obtain or check any proof of income from prospective customers.
The company also does not require consumers to provide information and documents to enable their income to be determined in order to establish whether they are able to pay for credit.
The NCR also claims the company misleads consumers in its advertising by not stipulating that it is required to supply documents to prove income.
Merwe Scholtz, chair of Southern View Finance Ltd, said good legal advice he had obtained from a reputable legal firm is of the opinion that the company’s process of providing credit is in line with the act.
He said the company is considering its options and whether it should submit the issue to the Consumer Tribunal for interpretation.
Crux of the matter
“The crux of NCR’s allegation is that we do not comply with the act, because we do not obtain the paper work, payslips and bank statements to substantiate consumers’ income,” he said.
“We are very open about the fact that we do not request this.”
Many credit suppliers, including small retailers, also do not require this information before they provide credit.
Observers believe that, should a payslip be required, a large section of SA’s consumers would not be able to obtain credit and this would prevent the development credit market from being active.
Scholtz said the fact that African Bank checked payslips did not mean it was “cautious” in granting credit.
He said Capfin follows a “conservative policy” in the granting of credit and prospective clients’ information is checked with credit bureaux.
He also does not easily grant loans for more than six months and in exceptional circumstances only for up to 24 months.
When the payment period of larger, longer term loans is repeatedly extended from, for instance, six months to 12 or 18 months, “the client and credit supplier could easily get the wrong impression that the client can afford the credit”.
“When the lending stops in the end, the client is unable to repay his debt.”
Scholtz said the percentage of a client’s salary on which the loan is based, is “much lower than that of African Bank and other similar rolep layers”.
The website of Southern View Finance Ltd states that it is incorporated in Bermuda and that its primary listing is there and a secondary listing is on the JSE's alternative bourse.
Currently it mainly supplies unsecured credit in SA, but it also plans to expand to the UK and Australia this year.
* For more business news in Afrikaans, see Netwerk24.
