Net 1 has come out guns blazing accusing the NCR of making “inflammatory allegations” that it claims are “riddled with factual inaccuracies”.
The company’s terse response follows a notice issued by the NCR earlier this week announcing that it had applied to the National Consumer Tribunal to have Moneyline Financial Service’s registration cancelled.
The NCR accuses Moneyline of contravening the National Credit Act (NCA) by extending credit to consumers receiving child support and foster grants where the grants were used as income for assessing a consumers’ credit affordability.
Moneyline was also accused of granting credit to consumers receving social grants without assessing their debt repayment history and without taking into account their monthly living expenses.
The NCR went on to say that Moneyline’s credit agreement with consumers “is not in the prescribed form and does not contain crucial information about the rights and obligations of consumers. Moneyline Financial Services does not keep and maintain documentation in support of the affordability assessments relating to consumers’ income and debt repayment history.”
Dr Serge Belamant, Net 1 chairman and CEO, responded to the allegations today saying the company was “perplexed” by the NCR’s decision to release a statement into its investigation into Moneyline’s practice without informing the company first and for failing to give his company a right of response to the allegations.
“We strongly deny any contravention of the NCA and will oppose the NCR’s application. As a South African- and US-listed public company, we adhere to stringent internal controls and compliance procedures and we are subjected to regular internal and external audits, all of which are documented and accessible for review by any regulator,” said Belmant in a statement.
“We reiterate our commitment to provide affordable, responsible financial inclusion services to all citizens of South Africa, especially those who have no other access to formal financial services and often require short-term credit to improve the lives of their family units,” he said.
Wikus Olivier, a debt counsellor at DebtSafe said that it’s entirely ethical and legal for credit providers to extend finance to any section of the population provided that credit providers perform proper affordability assessments, expense analysis and checks and balances to ensure a consumer can reasonably afford the amount of credit extended to them.
Depending on the credit amount the applicants seek, Olivier said Moneyline’s lending practice could potentially lead disenfranchised consumers into a debt trap.
NCR CEO Nomsa Motshegare earlier condemned the practice saying: “The use of child support grants as income for purposes of conducting affordability assessments on credit applications is totally unacceptable. It deprives children of money meant to provide for their daily necessities.”