The effectiveness of various Chapter 9 institutions has been a hot topic for debate recently. On a positive note, recent judgements indicate that the National Consumer Tribunal is fulfilling its role to protect consumers from unscrupulous credit providers.

The National Consumer Tribunal is an adjudicative body established by section 26 of the National Credit Act (No. 34 of 2005). The Tribunal rules on cases referred to it by the National Credit Regulator (NCR) and has jurisdiction throughout South Africa.

Here is a recent example to demonstrate how the Tribunal protects consumers. The NCR received 17 complaints about the lending practices of Chatspare Financial Services, which was charging the various complainants between 108% and 240% interest a year. At the time, the Usury Act, which was replaced by the National Credit Act in June 2006, capped interest rates at between 17% and 19% a year for amounts greater than R10 000.

The Tribunal ordered Chatspare to reimburse consumers who were charged these excessive interest rates and since the investigation started Chatspare has refunded R1, 2 million to aggrieved consumers. According to an article in the Weekend Argus, Pierre le Roux, the manager of Chatspare’s head office, testified under oath at the tribunal that the company was no longer operating as a credit provider.

This should serve as a warning to all credit providers engaged in unfair or abusive lending practices.