Debtfree May 2017

NEWS CONTINUED
DID THE NCT JUST KILL
EDCON?
After the recent ruling by the National
Consumer Tribunal (NCT) that Edcon
(and other credit providers) should not
charge a club fee since it is not provided
for in the National Credit Act, Edcon
could face a big problem. The matter
was brought before the NCT by the
National Credit Regulator (NCR) and the
ruling was in favour of the NCR, who say
it is a huge victory for consumers and
clarifies the issue of whether creditors
can add other such fees over and above
those that are mentioned in the NCA.
Not only might the NCT issue a fine
of many millions of Rand but Edcon
could be forced to potentially refund
consumers all the money taken since
2007 (when the NCA came into effect)
if they do not win an appeal against the
ruling. Edcon are appealing the ruling by
the NCT since they say that they do not
feel that the Club Fee is credit related.
This is a similar argument to that of the
NCR who say a credit provider should not
charge other types of fees. The challenge
for Edcon might relate to if any of these
club fees were ever factored into debts
(balances) owed by consumers using
credit with the credit provider and if
interest was levied on these Club fees,
as well as, the principle debt.
The appealed ruling handed down
by the NCT calls on Edcon to do a full
audit and provide the facts and figures
of those affected by these club fees
since 2007. The NCT will then rule on
the fine based upon this information.
Since Edcon brings in many hundreds of
millions of Rand each month in club fees
the total refund amount could be too
much for the Credit Provider to cover
and remain afloat in the months ahead.
Particularly during a time when sales
and credit usage by clients is down.
Another challenge is what this will do to
share prices as it might result in a similar
situation to the one that saw African
Bank (the old one not the new one that
looks exactly the same) go under.
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