National Credit Act, 2005 (Act No. 34 of 2005)

Chapter 1 : Interpretation, Purpose and Application of Act

Part A : Interpretation

2. Interpretation

1)        This Act must be interpreted in a manner that gives effect to the purposes set out in section 3.


2)        Any person, court or tribunal interpreting or applying this Act may consider appropriate foreign and international law.


3)        If a provision of this Act requires a document to be signed or initialed by a party to a credit agreement, that signing or initialing may be effected by use of-

a)        an advanced electronic signature, as defined in the Electronic Communications Act, 2002 (Act No. 25 of 2002); or

b)        an electronic signature as defined in the Electronic Communications Act, 2002 (Act No. 25 of 2002), provided that-

i)          the electronic signature is applied by each party in the physical presence of the other party or an agent of the party; and

ii)         the credit provider must take reasonable measures to prevent the use of the consumer’s electronic signature for any purpose other than thesigning or initialing of the particular document that the consumer intended to sign or initial.


4)        Despite the periods of time set out in section 7(1) and 42(1), each successive threshold determined by the Minister in terms of either section continues in effect until a subsequent threshold in terms of that section takes effect.


5)        When a particular number of business days is provided for between the happening of one event and another, the number of days must be calculated by-

a)        excluding the day on which the first such event occurs;

b)        including the day on or by which the second event is to occur; and

c)        excluding any public holiday, Saturday or Sunday that falls on or between the days contemplated in paragraphs (a) and (b) respectively.


6)        For all purposes of this Act, a person is a historically disadvantaged person if that person-

a)        is one of a category of natural persons who, before the Constitution of the Republic of South Africa, 1993 (Act No. 200 of 1993), came into operation,were disadvantaged by unfair discrimination on the basis of race;

b)        is an association, a majority of whose members are natural persons referred to in paragraph (a);

c)        is a juristic person other than an association, and natural persons referred to in paragraph (a) own and control a majority of its issued share capital ormembers’ interest and are able to control a majority of its votes; or

d)        is a juristic person or association, and persons referred to in paragraph (a), (b) or (c) own and control a majority of its issued share capital or members’ interest and are able to control a majority of its votes.


7)        Except as specifically set out in, or necessarily implied by, this Act, the provisions of this Act are not to be construed as-

a)        limiting, amending, repealing or otherwise altering any provision of any other Act;

b)        exempting any person from any duty or obligation imposed by any other Act;


c)        prohibiting any person from complying with any provision of another Act.

3. Purpose of Act

The purposes of this Act are to promote and advance the social and economic welfare of South Africans, promote a fair, transparent, competitive, sustainable, responsible, efficient, effective and accessible credit market and industry, and to protect consumers, by-

a)        promoting the development of a credit market that is accessible to all South Africans, and in particular to those who have historically been unable to access credit under sustainable market conditions;

b)        ensuring consistent treatment of different credit products and different credit providers;

c)        promoting responsibility in the credit market by-

i)          encouraging responsible borrowing, avoidance of over-indebtedness and fulfilment of financial obligations by consumers; and

ii)         discouraging reckless credit granting by credit providers and contractual default by consumers;

d)        promoting equity in the credit market by balancing the respective rights and responsibilities of credit providers and consumers;

e)        addressing and correcting imbalances in negotiating power between consumers and credit providers by-

i)          providing consumers with education about credit and consumer rights;

ii)         providing consumers with adequate disclosure of standardised information in order to make informed choices; and

iii)        providing consumers with protection from deception, and from unfair or fraudulent conduct by credit providers and credit bureaux;

f)          improving consumer credit information and reporting and regulation of credit bureaux;

g)        addressing and preventing over-indebtedness of consumers, and providing mechanisms for resolving over-indebtedness based on the principle of satisfaction by the consumer of all responsible financial obligations;

h)        providing for a consistent and accessible system of consensual resolution of disputes arising from credit agreements; and

i)          providing for a consistent and harmonised system of debt restructuring, enforcement and judgment, which places priority on the eventual satisfaction of all responsible consumer obligations under credit agreements.

4. Application of Act

1)        Subject to sections 5 and 6, this Act applies to every credit agreement between parties dealing at arm’s length and made within, or having an effect within, the Republic, except-

a)        a credit agreement in terms of which the consumer is-

i)          a juristic person whose asset value or annual turnover, together with the combined asset value or annual turnover of all related juristic persons, at the time the agreement is made, equals or exceeds the threshold value determined by the Minister in terms of section 7(1);

ii)         the state; or

iii)        an organ of state;

b)        a large agreement, as described in section 9(4), in terms of which the consumer is a juristic person whose asset value or annual turnover is, at the time the agreement is made, below the threshold value determined by the Minister in terms of section 7(1);

c)        a credit agreement in terms of which the credit provider is the Reserve Bank of South Africa; or

d)        a credit agreement in respect of which the credit provider is located outside the Republic, approved by the Minister on application by the consumer in the prescribed manner and form.


2)        For greater certainty in applying subsection (1)-

a)        the asset value or annual turnover of a juristic person at the time a credit agreement is made, is the value stated as such by that juristic person at the time it applies for or enters into that agreement;

b)        in any of the following arrangements, the parties are not dealing at arm’s length:

i)          a shareholder loan or other credit agreement between a juristic person, as consumer, and a person who has a controlling interest in that juristic person, as credit provider;

ii)         a loan to a shareholder or other credit agreement between a juristic person, as credit provider, and a person who has a controlling interest in that juristic person, as consumer;

iii)        a credit agreement between natural persons who are in a familial relationship and-

aa)      are co-dependent on each other; or

bb)      one is dependent upon the other; and

iv)        any other arrangement-

aa)      in which each party is not independent of the other and consequently does not necessarily strive to obtain the utmost possible advantage out of the transaction; or

bb)      that is of a type that has been held in law to be between parties who are not dealing at arm’s length;

c)        this Act applies to a credit guarantee only to the extent that this Act applies to a credit facility or credit transaction in respect of which the credit guarantee is granted; and

d)        a juristic person is related to another juristic person if-

i)          one of them has direct or indirect control over the whole or part of the business of the other; or

ii)         a person has direct or indirect control over both of them.


3)        The application of this Act in terms of subsection (1) extends to a credit agreement or proposed credit agreement irrespective of whether the credit provider-

a)        resides or has its principal office within or outside the Republic; or

b)        subject to subsection (1)(c), is-

i)          an organ of state;

ii)         an entity controlled by an organ of state;

iii)        an entity created in terms of any public regulation; or

iv)        the Land and Agricultural Development Bank.


4)        If this Act applies to a credit agreement-

a)        it continues to apply to that agreement even if a party to that agreement ceases to reside or have its principal office within the Republic; and

b)        it applies in relation to every transaction, act or omission under that agreement, whether that transaction, act or omission occurs within or outside the Republic.


5)        If a person sells any goods or services and accepts, as full payment for those goods or services-

a)        a cheque or similar instrument upon which payment is subsequently refused for any reason; or

b)        a charge by or on behalf of the buyer against a credit facility in terms of which a third person is the credit provider, and that credit provider subsequently refuses that charge for any reason,

the resulting debt owed to the seller by the issuer of that cheque or charge does not constitute a credit agreement for any purpose of this Act.


6)        Despite any other provision of this Act-

a)        if a consumer pays fully or partially for goods or services through a charge against a credit facility that is provided by a third party, the person who sells the goods or services must not be regarded as having entered into a credit agreement with the consumer merely by virtue of that payment; and

b)        if an agreement provides that a supplier of a utility or other continuous service-

i)          will defer payment by the consumer until the supplier has provided a periodic statement of account for that utility or other continuous service;


ii)         will not impose any charge contemplated in section 103 in respect of any amount so deferred, unless the consumer fails to pay the full amount due within at least 30 days after the date on which the periodic statement is delivered to the consumer,

that agreement is not a credit facility within the meaning of section 8(3), but any overdue amount in terms of that agreement, as contemplated in subparagraph (ii), is incidental credit to which this Act applies to the extent set out insection 5.


7)        In respect of an advertisement concerning credit, or in respect of a credit agreement or proposed credit agreement to which this Act applies, if there is an inconsistency between a provision of this Act read with any relevant definition in section (1), and a provision of sections 42 to 51 of the Electronic Communications and Transactions Act, 2002 (Act No. 25 of 2002)-

a)        the provisions of both Acts apply concurrently, to the extent that it is possible to apply and comply with one of the inconsistent provisions without contravening the second; and

b)        the provisions of this Act prevail to the extent that it is impossible to apply or comply with one of the inconsistent provisions without contravening the second.

5. Limited application of Act to incidental credit agreements

1)        Only the following provisions of this Act apply with respect to an incidental credit agreement:

a)        Chapters 1, 2, 7, 8 and 9;

b)        Chapter 3, sections 54 and 59;

c)        Chapter 4, Parts A and B;

d)        Chapter 4, Part D, except to the extent that it deals with reckless credit;

e)        Chapter 5, Part C, subject to subsection (3)(a);

f)          Chapter 5, Parts D and E, once the incidental credit agreement is deemed to have been made in terms of subsection (2); and

g)        Chapter 6, Parts A and C.


2)        The parties to an incidental credit agreement are deemed to have made that agreement on the date that is 20business days after-

a)        the supplier of the goods or services that are the subject of that account, first charges a late payment fee or interest in respect of that account; or

b)        a pre-determined higher price for full settlement of the account first becomes applicable,

unless the consumer has fully paid the settlement value before that date.


3)        A person may only charge or recover a fee, charge or interest-

a)        in respect of a deferred amount under an incidental credit agreement as provided for in section 101(d), (f) and (g) subject to any maximum rates of interest or fees imposed in terms of section 105; or

b)        in respect of an unpaid amount contemplated in paragraph (a) of the definition of "incidental credit agreement" only if the credit provider has disclosed, and the consumer has accepted, the amount of such a fee, charge or interest, or the basis on which it may become payable, on or before the date on which the relevant goods or services were supplied.

Debt Counsellors

Marsia Kuypers

Tel: 082 396 2568

Fax: 086 556 3328

Area: Pretoria

Jan-Viljoen Coetzee

Tel: 084 549 1755

Fax: 086 621 9193

Area: Nina Park

Valerie Nakale

Tel: 018 381 8768

Fax: 018 381 8604

Area: Mafikeng

Dean Morris

Tel: 083 645 4094

Fax: 031 763 4363

Area: La Lucia

Joana Vivier

Tel: 053 832 6229

Fax: 086 543 4640

Area: Kimberley

Jacques Jooste

Tel: 011 794 7555

Fax: 011 794 9965

Area: Johannesburg

Marlene Stein

Tel: 012 667 4177

Fax: 086 527 2203

Area: Irene

Heidi Naude

Tel: 044 873 0281

Fax: 086 512 5012

Area: George

Herbert Theron

Tel: 011 472 0088

Fax: 086 655 6730

Area: Florida

Isabe Landman

Tel: 041 933 1189

Fax: 086 591 2676

Area: Despatch

Andiswa Tinto

Tel: 021 431 9134

Fax: 086 523 7084

Area: Cape Town

Jaco Janse Van Rensburg

Tel: 082 568 4969

Fax: 086 645 0389

Area: Barberton

Monique Snyders

Tel: 032 946 3024

Fax: 086 588 4605

Area: Ballito

Christopher Beukes

Tel: 084 2577599

Fax: 021 637 5023

Area: Athlone

Lydia Kinnear

Tel: 082 824 6338

Fax: 086 537 5976

Area: Annlin

Anlizette Schuurman

Tel: 031 903 3840

Fax: 031 701 5570

Area: Amanzimtoti

Kelebogile Mooketsi

Tel: 082 299 3430

Fax: 086 695 3280

Area: Amandasig

Annerie Marais

Tel: 083 703 0486

Fax: 045 838 6572

Area: Aliwall North

Rerandzo Mokgwatlheng

Tel: 082 430 6329

Fax: 011 805 8348

Area: Alexandra Township

Daniel Lezar

Tel: 011 907 1022

Fax: 011 907 1490

Area: Alberton