In November 2016, a number of retailers were taking the National Credit Regulator (NCR) and the Minister of Trade and Industry (DTI) to court with the aim of having parts of the affordability assessment criteria declared unlawful and constitutionally invalid.

The High Court issued a major ruling, in favour of these retailers, against the Minister of Trade and Industry and the National Credit Regulator.

According to the retailers, this regulation was unreasonable and unfair discrimination against the poorer and less privileged people of the society. It also creates a problem for entrepreneurs, especially in the informal sector.

The court ordered that regulation 23A(4) of the regulations made by the Minister of Trade and Industry under section 82(2) read together with section 171(1) of the National Credit Act34 of 2005 be set aside.

This means that there is no longer any need to collect any particular form of documentation proving income when applying for credit.

The National Credit Act (NCA), aims to promote the development of a credit market that is accessible to all South Africans and particularly for those which have historically been unable to access credit under sustainable market conditions. The court was of the opinion that the purpose of the NCA was not met.

The responsibility of the credit providers to make sure that no reckless credit being granted was not taken away by this ruling, but rather requires them to look more logically and humanly into a person’s circumstances, rather than relying on bank statements or pay-slips.

The DTI has not responded to the court ruling – they are currently proposing new amendments to the NCA which may result that some consumers (those earning less than R7 500 per month, with less than R50 000 debt) having their debts completely written off.