MegaBanner-Right

MegaBanner-Left

LeaderBoad-Right

LeaderBoard-Left

Home » Uncategorized » Major judgement to help protect South Africans in debt: report

Major judgement to help protect South Africans in debt: report

A new Supreme Court of Appeal judgement will bring welcome relief to indebted South Africans.

According to a report by GroundUp, the ruling upheld that borrowers may not pay more than 3% interest a month on a second short-term loan taken out in a 12 month period.

The regulations were originally introduced by the National Credit Regulator and the Department of Trade and Industry.

However, these regulations were challenged by Micro Finance South Africa (MFSA) which argued it would reduce credit availability to those most in need.

The High Court originally ruled in favour of MFSA but this was overturned on appeal by a full bench of the court.

That decision was also appealed by MFSA at the Supreme Court of Appeal, which has now ruled in favour of the NCR and DTI. This means that the new regulations remain in force.

In duplum rule

While this is good news for indebted South Africans, legal experts warned that consumers still need to be cautious of taking out multiple loans.

Speaking to GroundUp, independent legal and financial advisor Leonard Benjamin said that micro-lenders are able to get around the in duplum rule (which states that borrowers can never pay more than double the loan outstanding) by offering multiple secondary loans.

“At an interest rate of 5% a month you very quickly reach that ceiling,” he said. “Borrowers at this end of the market can very quickly end up in a debt trap from which they can never escape.”


This article was sourced from BusinessTech; for the original article, click here.

To enquire about Cape Business News' digital marketing options please contact sales@cbn.co.za

Related articles

The hidden gold in your drawer: How eWaste is powering the circular economy

Africa is experiencing a digital revolution. But while more people gain access to devices that improve lives, there’s a growing downside: electronic waste. Over...

City partnership programmes put young Capetonians to work

The City’s work with industry growth organisations has yielded major investments and thousands of jobs for young Capetonians.   ‘By funding and working closely with our...

MUST READ

Strategic co-location of IFAT Africa and analytica Lab Africa to boost...

IFAT Africa and analytica Lab Africa will be co-located at the Gallagher Convention Centre this year to optimise the synergies across the laboratories, science...

RECOMMENDED

Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.

Strictly Necessary Cookies

Strictly Necessary Cookie should be enabled at all times so that we can save your preferences for cookie settings.

If you disable this cookie, we will not be able to save your preferences. This means that every time you visit this website you will need to enable or disable cookies again.