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

Chapter 4 : Consumer Credit Policy

Part D : Over-indebtedness and reckless credit

81. Prevention of reckless credit

 

(1) When applying for a credit agreement, and while that application is being considered by the credit provider, the prospective consumer must fully and truthfully answer any requests for information made by the credit provider as part of the assessment required by this section.

 

(2) A credit provider must not enter into a credit agreement without first taking reasonable steps to assess—
(a) the proposed consumer’s—
(i) general understanding and appreciation of the risks and costs of the proposed credit, and of the rights and obligations of a consumer under a credit agreement;
(ii) debt re-payment history as a consumer under credit agreements;
(iii) existing financial means, prospects and obligations; and
(b) whether there is a reasonable basis to conclude that any commercial purpose may prove to be successful, if the consumer has such a purpose for applying for that credit agreement.

 

(3) A credit provider must not enter into a reckless credit agreement with a prospective consumer.

 

(4) For all purposes of this Act, it is a complete defence to an allegation that a credit agreement is reckless if—
(a) the credit provider establishes that the consumer failed to fully and truthfully answer any requests for information made by the credit provider as part of the assessment required by this section; and
(b) a court or the Tribunal determines that the consumer’s failure to do so materially affected the ability of the credit provider to make a proper assessment.