University of Stellenbosch Law Clinic v National Credit Regulator

Collection costs interpreted as provided in the National Credit Act and the high court stressed the need for responsible lending by  ensuring that creditor providers properly vet their clients and conduct proper affordability assessments to ensure that consumers can in fact repay loans.

‘This is an application in terms of which applicants seek a declaratory order to determine the interpretation of the definition of ‘collection costs’ in section 1, and the application of the provisions in section 101(1)(g) and section 103(5) of the National Credit Act, Act 34 of 2005 (hereinafter referred to as the “credit act”). The first and second applicants render legal advice and services to many, but in particular to the third to twelfth applicants who are all consumers as defined in the credit act. Of the forty nine respondents there were only appearances on behalf of a few. The first respondent, the National Credit Regulator was represented without opposing the relief sought. . . . ” [para 1]


Collection costs interpreted and clarified by the high court and order granted to recalculate various individual accounts to ensure the correct legal position is applied. 


(14203/2018) [2019] ZAWCHC 172 ; [2019] JOL 46447 (HC) (13 December 2019)


Application granted – see judgment for details.


Hack AJ.

DATE OF HEARING: 12 August 2019

DELIVERED: 13 December 2019


” . . . . I take judicial notice of the notorious fact that consumers are constantly being cajoled and encourage applying for credit. This occurs not only by advertising but particularly by the use of mobile phone technology. More often than not these adverts or invitations to consumers rely on their vulnerability to succumb to the universal pursuit of consumer goods and the rubric of ‘buy now pay later’. The result, as is pertinently demonstrated in the cases before this court, is that the poor, in succumbing to the alluring of credit, simply get poorer. In my view the credit act had has an essential purpose the need to address disparities of wealth in this country. I share the view of the highest courts over years that profit is essential to for the growth of the economy.

But if the pursuit of profit results in the exploitation of the poor and the ever widening disparity of wealth, this gives meaning to the other rubric that the rich are getting richer and the poor are getting poorer. I am satisfied the legislature intervened in the national credit act to curb such exploitation resulting in the ever widening gap of wealth in this country.

I accept that the result may be that certain of the wealthier institutions or enterprises in this country will have their profits reduced. This is an acceptable result if has the concomitant consequence that the poor will not be enslave even further in spiralling debt. I am satisfied that the credit act must be interpreted to obtain this purpose. A purpose which the legislature intended. Accordingly I am satisfied that the applicants have made out a case for the declaratory orders.” [para 39]

Quotations from judgment

Note: Footnotes omitted and emphasis added