Mr Price takes on NCR in club fee fight

File picture: Simphiwe Mbokazi

File picture: Simphiwe Mbokazi

Published Jun 2, 2017

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Johannesburg - The National Credit Regulator (NCR) on Thursday said it had referred listed-retailer Mr Price Group to the National Consumer Tribunal following a probe which revealed the chain has apparently been unlawfully charging consumers a club fee on credit agreements.

The development, which puts the spotlight on the prevalence of the club fees on credit agreements, comes shortly after the tribunal’s recent ruling that the monthly club fees charged by the Edcon Group - which operates the Edgars, Jet and CNA stores - were unlawful. Edcon said it would appeal the decision.

Charging a club fee on credit agreements was not permitted by the National Credit Act, the NCR said in a statement yesterday.

It had requested Mr Price to produce a fully-audited report of the club fees charged to consumers from 2007.

Read also:  Mr Price CFO sells down stake

The regulator alluded to the prevalence of the club fees, saying it had already referred several retailers to the tribunal for charging consumers a club fee on credit agreements. “Investigations into the cost of credit are being conducted across the credit industry,” it said.

The NCR said it had requested the tribunal to impose a fine of up to 10percent of annual turnover, and to order that Mr Price refund consumers who were unlawfully charged.

In a statement yesterday, Mr Price said the alleged transgression only pertained to Milady's, which is one of its six trading divisions. Milady’s, which is an authorised financial services and credit provider, offered the club product to their account customers.

 “It is imperative to note that this product is a standalone product which entitles voluntary signed-up members to a number of benefits including loyalty vouchers, savings with affinity partners and lifestyle magazines.

“Over the years, customers have been happy with the services and benefits associated with the club and, as a group, we believe in the value offering which supports our proposition of great fashion and value,” Mr Price said.

The group said it opposed NCR’s referral to the tribunal as it did not agree with the regulator’s view. It said it had obtained the advice of senior counsel, “which was to the effect that the NCR’s position is untenable as it appears it has no rational basis for the relief sought against the company in these proceedings. 

It should also be noted that the underlying judgment handed down by the tribunal against Edcon, upon which the NCR relies in holding this view, is being appealed”.

Mr Price shares on the JSE on Thursday shrugged off the alleged contravention, slipping only 0.33percent to R149.51.

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