National Credit Act, 2005 (Act No. 34 of 2005)

Chapter 1 : Interpretation, Purpose and Application of Act

Part A : Interpretation

1. Definitions

Purchase

In this Act—

"advertisement"

means any written, illustrated, visual or other descriptive material, communication, representation or reference by means of which a person seeks to bring to the attention of all or part of the public the nature, properties, advantages or uses of, conditions on, or prices of—

(a)	goods to be purchased, leased or otherwise acquired;

(b)	any available service; or

(c)	credit to be granted;

"agreement"

includes an arrangement or understanding between or among two or more parties, which purports to establish a relationship in law between those parties;

"alternative dispute resolution agent"

means a person providing services to assist in the resolution of consumer credit disputes through conciliation, mediation or arbitration;

"applicable provincial legislation"

means legislation enacted by a province concerning credit agreements;

"Board"

[Definition deleted by section 1(a) of Act No. 19 of 2014]

"Cabinet"

means the Cabinet referred to in section 91 of the Constitution;

"code of conduct"

except in respect of the industry code of conduct contemplated in section 76, means a code regulating the interaction between or among persons conducting business within an industry;

[Definition inserted by section 1(b) of Act No. 19 of 2014]

"collection costs"

means an amount that may be charged by a credit provider in respect of enforcement of a consumer’s monetary obligations under a credit agreement, but does not include a default administration charge;

"collective agreement"

has the meaning set out in the Labour Relations Act, 1995 (Act No. 66 of 1995);

"complainant"

means a person who has filed a complaint in terms of section 136(1);

"confidential information"

means personal information that belongs to a person and is not generally available to or known by others;

"Constitution"

means the Constitution of the Republic of South Africa, 1996;

[Definition inserted by section 1(a) of Notice No. 1081, GG 42649, dated 19 August 2019]

"co-operative"

means an autonomous association of persons united voluntarily to meet their common economic and social needs and aspirations through a jointly owned and democratically controlled enterprise organised and operated on co-operative principles;

"consumer"

in respect of a credit agreement to which this Act applies, means—

(a)	the party to whom goods or services are sold under a discount transaction, incidental credit agreement or instalment agreement;

(b)	the party to whom money is paid, or credit granted, under a pawn transaction;

(c)	the party to whom credit is granted under a credit facility;

(d)	the mortgagor under a mortgage agreement;

(e)	the borrower under a secured loan;

(f)	the lessee under a lease;

(g)	the guarantor under a credit guarantee; or

(h)	the party to whom or at whose direction money is advanced or credit granted under any other credit agreement;

"consumer court"

means a body of that name, or a consumer tribunal, established by provincial legislation;

"continuous service’’

means the supply for consideration of a utility or service, other than credit or access to credit, or the supply of such a utility or service combined with the supply of any goods that are essential for the utilisation of that utility or service by the consumer, with the intent that, so long as the agreement to supply that utility or service remains in force, the supplier will make the service continuously available to be used, accessed or drawn upon—

(a)	from time to time as determined by the consumer; and

(b)	with any frequency or in any amount as determined, accessed, required, demanded or drawn upon by the consumer, subject only to any total use or cost limits set out in the agreement;

"credit"

when used as a noun, means—

(a)	a deferral of payment of money owed to a person, or a promise to defer such a payment; or

(b)	a promise to advance or pay money to or at the direction of another person;

"credit agent"

means a person appointed to represent a credit provider as contemplated in section 163, other than an employee of that credit provider;

"credit bureau"

means a person required to apply for registration as such in terms of section 43(1);

"credit agreement"

means an agreement that meets all the criteria set out in section 8;

"credit facility"

means an agreement that meets all the criteria set out in section 8(3);

"credit guarantee"

means an agreement that meets all the criteria set out in section 8(5);

"credit insurance"

means an agreement between an insurer, on one hand, and a credit provider or a consumer or both, on the other hand, in terms of which the insurer agrees to pay a benefit upon the occurrence of a specified contingency, primarily for the purpose of satisfying all or part of the consumer’s liability to the credit provider under a credit agreement as at the time that the specified contingency occurs, and includes—

(a)	a credit life insurance agreement;

(b)	an agreement covering loss of or damage to property; or

(c)	an agreement covering—

(i)	loss or theft of an access card, personal information number or similar device; or

(ii)	any loss or theft of credit consequential to a loss or theft contemplated in sub-paragraph (i);

"credit life insurance"

includes cover payable in the event of a consumer’s death, disability, terminal illness, unemployment, or other insurable risk that is likely to impair the consumer’s ability to earn an income or meet the obligations under a credit agreement:

"credit provider"

in respect of a credit agreement to which this Act applies, means—

(a)	the party who supplies goods or services under a discount transaction, incidental credit agreement or instalment agreement;

(b)	the party who advances money or credit under a pawn transaction;

(c)	the party who extends credit under a credit facility;

(d)	the mortgagee under a mortgage agreement;

(e)	the lender under a secured loan;

(f)	the lessor under a lease;

(g)	the party to whom an assurance or promise is made under a credit guarantee;

(h)	the party who advances money or credit to another under any other credit agreement; or

(i)	any other person who acquires the rights of a credit provider under a credit agreement after it has been entered into;

"credit regulator"

means a provincial credit regulator or the National Credit Regulator established by section 12;

"credit transaction"

means an agreement that meets the criteria set out in section 8(4);

"credit co-operative"

means a co-operative whose predominant purpose is to offer financial services to its members;

"debt intervention"

means a measure as contemplated in section 86A, which aims to assist identified consumers for whom existing natural person insolvency measures are not accessible in practice;

[Definition inserted by section 1(b) of Notice No. 1081, GG 42649, dated 19 August 2019]

"debt intervention applicant"

means a natural person, or natural persons who own a joint estate, who on the date of submission of the application for debt intervention contemplated in section 86A—

(a)	is a consumer under unsecured credit agreements, unsecured short term credit transactions or unsecured credit facilities only;

(b)

receives no income, or if he or she, or the joint estate, receives an income or has a right to receive income, regardless of the source, frequency or regularity of that income, that gross income did not, on an average for the six months preceding the date of the application for debt intervention exceed R7500 or such an amount as may be prescribed by section 171(2A)(a), per month;

(c)	is over-indebted, whether due to a change in personal circumstances or other circumstances; and

(d)	is not sequestrated or subject to an administration order;

[Definition inserted by section 1(b) of Notice No. 1081, GG 42649, dated 19 August 2019]

"default administration charge"

means a charge that may be imposed by a credit provider to cover administration costs incurred as a result of a consumer defaulting on an obligation under a credit agreement;

"developmental credit agreement"

means a credit agreement that satisfies the criteria set out in section 10;

"discount transaction"

means an agreement, irrespective of its form, in terms of which—

(a)	goods or services are to be provided to a consumer over a period of time; and

(b)	more than one price is quoted for the goods or service, the lower price being applicable if the account is paid on or before a determined date, and a higher price or prices being applicable if the price is paid after that date, or is paid periodically during the period;

"educational loan"

means—

(a)	a student loan;

(b)	a school loan; or

(c)	another credit agreement entered into by a consumer for purposes related to the consumer’s adult education, training or skill’s development;

"effective date"

in relation to any particular provision of this Act, means the date on which that provision came into operation;

"emergency loan"

means a credit agreement entered into by a consumer to finance costs arising from or associated with—

(a)	a death, illness or medical condition;

(b)	unexpected loss or interruption of income; or

(c)	catastrophic loss of or damage to home or property due to fire, theft, or natural disaster,

affecting the consumer, a person who is dependent upon the consumer or a person for whom the consumer is financially responsible;

"equality court"

has the meaning set out in the Promotion of Equality and Prevention of Unfair Discrimination Act;

"extinguish"

means, save as is specifically provided in this Act—

(a)	the cessation of all rights and obligations inherent to, or resulting from, a credit agreement; and

(b)	the cessation of any rights or obligations that may arise in law, whether statutory or otherwise, because of the cessation contemplated in paragraph (a),

prospectively from the date on which the act of extinguishment becomes effective;

[Definition inserted by section 1(c) of Notice No. 1081, GG 42649, dated 19 August 2019]

"financial literacy"

means the knowledge, ability and opportunity to make sound money management choices;

[Definition inserted by section 1(c) of Notice No. 1081, GG 42649, dated 19 August 2019]

"incidental credit agreement"

means an agreement, irrespective of its form, in terms of which an account was tendered for goods or services that have been provided to the consumer, or goods or services that are to be provided to a consumer over a period of time and either or both of the following conditions apply—

(a)	a fee, charge or interest became payable when payment of an amount charged in terms of that account was not made on or before a determined period or date; or

(b)	two prices were quoted for settlement of the account, the lower price being applicable if the account is paid on or before a determined date, and the higher price being applicable due to the account not having been paid by that date.

"initiation fee"

means a fee in respect of costs of initiating a credit agreement, and—

(a)	charged to the consumer by the credit provider; or

(b)	paid to the credit provider by the consumer upon entering into the credit agreement;

"inspector"

means a person appointed as such in terms of section 25(1)(a);

"instalment agreement"

means a sale of movable property in terms of which—

(a)	all or part of the price is deferred and is to be paid by periodic payments;

(b)	possession and use of the property is transferred to the consumer;

(c)	ownership of the property either—

(i)	passes to the consumer only when the agreement is fully complied with; or

(ii)	passes to the consumer immediately subject to a right of the credit provider to re–possess the property if the consumer fails to satisfy all of the consumer’s financial obligations under the agreement; and

(d)	interest, fees or other charges are payable to the credit provider in respect of the agreement, or the amount that has been deferred;

"juristic person"

includes a partnership, association or other body of persons, corporate or unincorporated, or a trust if—

(a)	there are three or more individual trustees; or

(b)	the trustee is itself a juristic person, but does not include a stokvel;

"knowing"

when used with respect to a person, and in relation to a particular matter, means that the person either—

(a) had actual knowledge of the matter; or

(b) was in a position in which the person reasonably ought to have—

(i)	had actual knowledge;

(ii)	investigated the matter to an extent that would have provided the person with actual knowledge; or

(iii)

taken other measures which, if taken, would reasonably be expected to have provided the person with actual knowledge of the matter;

[Definition inserted by section 1(d) of Notice No. 1081, GG 42649, dated 19 August 2019]

"knowingly"

when used with respect to a person, and in relation to a particular matter, means that the person either—

(a) had actual knowledge of the matter; or

(b) was in a position in which the person reasonably ought to have—

(i)	had actual knowledge;

(ii)	investigated the matter to an extent that would have provided the person with actual knowledge; or

(iii)

taken other measures which, if taken, would reasonably be expected to have provided the person with actual knowledge of the matter;

[Definition inserted by section 1(d) of Notice No. 1081, GG 42649, dated 19 August 2019]

"Land and Agricultural Development Bank"

has the meaning set out in the Land and Agricultural Development Bank Act, 2002 (Act No. 15 of 2002);

"lease"

means an agreement in terms of which—

(a)	temporary possession of any movable property is delivered to or at the direction of the consumer, or the right to use any such property is granted to or at the direction of the consumer;

(b)	payment for the possession or use of that property is—

(i)	made on an agreed or determined periodic basis during the life of the agreement; or

(ii)	deferred in whole or in part for any period during the life of the agreement;

(c)	interest, fees or other charges are payable to the credit provider in respect of the agreement, or the amount that has been deferred; and

(d)	at the end of the term of the agreement, ownership of that property either—

(i)	passes to the consumer absolutely; or

(ii)	passes to the consumer upon satisfaction of specific conditions set out in the agreement;

"licence"

means the authority, regardless of its specific title or form, issued to a regulated financial institution and in terms of which it is authorised to conduct its business;

"low income housing"

includes any housing provided in terms of a housing development program, housing assistance measure or any other measure or arrangement designed to—

(a)	facilitate access to housing or housing delivery; or

(b)	rehabilitate or upgrade existing housing stock, or related municipal infrastructure and services, for the benefit of persons contemplated in section 13(a), or other persons who cannot independently provide for their own housing needs;

"Magistrates’ Courts Act"

means the Magistrates’ Courts Act, 1944 (Act No. 32 of 1944);

"MEC"

means a Member of the Executive Council;

"member of the Board"

[Definition deleted by section 1(c) of Act No. 19 of 2014]

"Minister"

means the member of the Cabinet responsible for consumer credit matters;

"mortgage"

means a mortgage bond registered by the registrar of deeds over immovable property that serves as continuing covering security for a mortgage agreement;

[Definition substituted by section 1(d) of Act No. 19 of 2014]

"mortgage agreement"

means a credit agreement that is secured by the registration of a mortgage bond by the registrar of deeds over immovable property;

[Definition substituted by section 1(e) of Act No. 19 of 2014]

"National Assembly"

means the House of Parliament referred to in section 42(1)(a) of the Constitution;

[Definition inserted by section 1(e) of Notice No. 1081, GG 42649, dated 19 August 2019]

"official language"

means an official language listed in section 6(1) of the Constitution;

"ombud with jurisdiction"

in respect of any particular dispute arising out of a credit agreement in terms of which the credit provider is a "financial institution" as defined in the Financial Sector Regulation Act, 2017, means an "ombud scheme" as that term is defined in that Act, that has jurisdiction in terms of that Act to deal with a complaint against that financial institution;

[Definition substituted by section 290, item 1 in Schedule 4, of Act No. 9 of 2017 - effective 1 October 2018 (paragraph (h) of Notice 169 of 2018)]

"organ of state"

means an organ of state as defined in section 239 of the Constitution;

"pawn transaction"

means an agreement, irrespective of its form, in terms of which—

(a)	one party advances money or grants credit to another, and at the time of doing so, takes possession of goods as security for the money advanced or credit granted; and

(b)

either—

(i)	the estimated resale value of the goods exceeds the value of the money provided or the credit granted, or

(ii)	a charge, fee or interest is imposed in respect of the agreement, or in respect of the amount loaned or the credit granted; and

(c)	the party that advanced the money or granted the credit is entitled on expiry of a defined period to sell the goods and retain all the proceeds of the sale in settlement of the consumer’s obligations under the agreement;

"payment distribution agent"

means a person who on behalf of a consumer, that has applied for debt review in terms of this Act, distributes payments to credit providers in terms of a debt re-arrangement, court order, order of the Tribunal or an agreement;

[Definition inserted by section 1(f) of Act No. 19 of 2014]

"premises"

includes land, or any building, structure, vehicle, ship, boat, vessel, aircraft or container;

"prescribed"

means prescribed by regulation;

"principal debt"

means the amount calculated in accordance with section 101(1)(a);

"private dwelling"

means any part of a formal or informal structure that is occupied as a residence, or any part of a structure or outdoor living area that is accessory to, and used principally for the purposes of, a residence;

"prohibited conduct"

means an act or omission in contravention of this Act;

[Definition substituted by section 1(g) of Act No. 19 of 2014]

"Promotion of Equality and Prevention of Unfair Discrimination Act"

means the Promotion of Equality and Prevention of Unfair Discrimination Act, 2000 (Act No. 4 of 2000);

"provincial credit regulator"

means a body within the provincial sphere of government authorised to regulate consumer credit matters within a province;

"public interest credit agreement"

means a credit agreement that meets all the criteria prescribed in terms of section 11, and which is therefore exempt from the application of provisions of this Act concerning reckless credit;

"public regulation"

means any national, provincial or local government legislation or subordinate legislation, or any licence, tariff, directive or similar authorisation issued by a regulatory authority or pursuant to any statutory authority;

"reckless credit"

means the credit granted to a consumer under a credit agreement concluded in circumstances described in section 80;

"registrant"

means a person who has been registered in terms of this Act;

"regulated financial institution"

means a bank as defined in the Banks Act, 1990 (Act No. 94 of 1990), a Mutual Bank as defined in the Mutual Banks Act, 1993 (Act No. 124 of 1993); or any other financial institution that is similarly licensed and authorised to conduct business and take deposits from the public, in terms of any national legislation;

"regulation"

means a regulation made under this Act;

"regulatory authority"

means an entity established in terms of national or provincial legislation responsible for regulating an industry, or sector of an industry;

"repealed law"

means an Act mentioned in section 172(4), or a public regulation made in terms of such an Act;

"representative trade union"

has the meaning set out in the Labour Relations Act, 1995 (Act No. 66 of 1995);

"respondent"

means a person against whom a complaint or application has been initiated in terms of this Act;

"school loan"

means a credit agreement in terms of which—

(a)	money is paid to a primary or secondary school on account of school fees or related costs for the benefit of the consumer’s child or other dependant; or

(b)	a primary or secondary school defers payment of all or part of the school fees or related costs for the consumer’s child or other dependant;

"secured loan"

means an agreement, irrespective of its form but not including an instalment agreement, in terms of which a person—

(a)	advances money or grants credit to another, and

(b)	retains, or receives a pledge to any movable property or other thing of value as security for all amounts due under that agreement;

[Paragraph (b) substituted by section 1(h) of Act No. 19 of 2014]

"service fee"

means a fee that may be charged periodically by a credit provider in connection with the routine administration cost of maintaining a credit agreement;

"settlement value"

means the amount in respect of a credit agreement that is required to be paid on a particular date to satisfy all the consumer’s financial obligations to the credit provider, as calculated in accordance with section 125(2);

"sms"

means a short message service provided through a telecommunication system;

"small business"

has the meaning set out in the National Small Business Act, 1996 (Act No. 102 of 1996);

"South African Reserve Bank"

has the meaning set out in the South African Reserve Bank Act, 1989 (Act No. 90 of 1989);

"statutory exception"

means a provision of this Act that specifically provides for exceptional treatment of developmental credit agreements;

"stokvel"

means a formal or informal rotating financial scheme with entertainment, social or economic functions, which—

(a)	consists of two or more persons in a voluntary association, each of whom has pledged mutual support to the others towards the attainment of specific objectives;

(b)	establishes a continuous pool of capital by raising funds by means of the subscriptions of the members;

(c)	grants credit to and on behalf of members;

(d)	provides for members to share in profits from, and to nominate management of, the scheme; and

(e)	relies on self-imposed regulation to protect the interest of its members;

"student loan"

means a credit agreement in terms of which—

(a)	money is paid by the credit provider to an institution of tertiary education on account of education fees or related costs for the benefit of the consumer or a dependant of the consumer; or

(b)	an institution of tertiary education defers payment of all or part of the consumer’s education fees or related costs;

"temporary increase"

with respect to the credit limit applicable to a credit facility, means an increase in circumstances described in section 119(2);

"this Act"

includes a Schedule to this Act, a regulation made or a notice issued under this Act;

"total unsecured debt"

means the total of all principal debts due by a debt intervention applicant under the unsecured credit agreements, unsecured short term credit transactions or unsecured credit facilities to which the debt intervention applicant is a party;

[Definition inserted by section 1(f) of Notice No. 1081, GG 42649, dated 19 August 2019]

"Tribunal"

means the National Consumer Tribunal established by section 26; and

"utility"

means the supply to the public of an essential—

(a)	commodity, such as electricity, water, or gas; or

(b)	service, such as waste removal, or access to sewage lines, telecommunication networks or any transportation infrastructure.