Know what’s legal when it comes to credit

Considering applying for credit? Before you do it’s important to know that credit agreements and clauses have to be lawful. 

Mellony Ramalho

African Bank’s Group Executive: Sales, Branch Network, Mellony Ramalho, says there are a few things to look out for before signing on the bottom line.

“A credit agreement is considered to be unlawful when the consumer is a minor, for example, and no guardian was present at the time of signing. The consumer also has to be mentally fit and the credit provider has to be registered with the National Credit Regulator.”

Ramalho adds that if the consumer has been a victim of negative option marketing – this is where a credit provider offers a consumer credit which then automatically becomes a credit agreement unless the consumer rejects the offer – this is also considered to be unlawful and can be challenged.

“You also need to be aware of clauses in agreements that could be unlawful. For example, we have seen cases where documents have clauses that mislead the consumer or subject the consumer to potential fraud.”

“You should also never accept a clause which says you have waived certain rights that may apply to credit agreements. The rights that cannot be waived include a consumer’s right to apply for debt review when over indebted, the right to have repossessed goods sold at a fair, market-related price, and the right to dispute any debits that pass through a consumer’s account,” she says.

A few more unlawful clauses worth noting include:

  • Clauses that require consumers to acknowledge that they received goods or any information from credit providers, before the goods or information have actually been received by the consumer.
  • Clauses which require the consumer to agree to forfeit monies paid to credit providers in the event of the consumer terminating the agreement.

“It’s also important to note that there should never be a clause in an agreement that requires you to leave items such as identity documents, bank cards or pin numbers of bank cards with credit providers,” says Ramalho.

“If you believe that an agreement includes unlawful clauses or has been concluded unlawfully, you have the right to report it to the National Credit Regulator,” she concludes.

National Credit Regulator contact details:

0860 627 627 or

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