FINALLY a regulator has announced it is doing something about the now notorious “R699 per month” car scheme, which imploded earlier this month, leaving thousands of people responsible for bloated car repayments without the “subsidy” they had relied on.
The National Credit Regulator (NCR) issued a statement saying it had issued a compliance notice against the company behind the scheme, Satinsky 128 (Pty) Ltd, “in a bid to combat predatory lending practices”.
According to the National Credit Act (NCA), an advert cannot state a certain monthly repayment – as in “from R699 per month” – without also disclosing the number of instalments, the interest rate and all other fees payable.
In other words, the entire cost of the deal needs to be laid bare, or the advert is misleading.
Well, for the many thousands who have removed the ugly advertising stickers from their cars since Satinsky announced on July 1 that they would no longer be getting their contractual “advertising fees”, news that the adverts were misleading has come far too late to be of any help to them.
The advertising contracts may have been terminated without their consultation, but their contracts with their banks – Nedbank’s MFC, Absa and Standard – remain legally binding on them.
And their instalments, on mostly cheap, entry-level cars such as the Tata Indica, are relatively high, thanks to uncompetitive interest rates and retail car prices bloated with extras such as a R3 500 delivery fee.
The banks insist they assessed the affordability of the applicants without taking into account what they expected to earn in advertising fees. But now that the fees have dried up, most say they cannot afford the bank instalments.
So for them, the last few lines of yesterday’s NCR statement – the announcement that the body is investigating the Satinsky scheme “for other possible contraventions of the National Credit Act” – will be of most interest.
“The purpose of the investigation is to establish if vehicle owners were granted credit in accordance with the NCA,” chief executive Nomsa Motshegare is quoted as saying.
The act requires credit providers to take “reasonable steps” to assess an applicant’s monthly income and expenditure to ensure that he or she can afford to service the loan being applied for. It is alleged that in many of the cases in question, the financial information applicants supplied to Satinsky reps was altered before being presented to the banks.
Totals for monthly living expenses were reduced, in some cases drastically, to the point of being implausible – less than R1 000 a month for rent, petrol, groceries and utilities, for example. Satinsky Group chief executive Albert Venter, meanwhile, is refusing to answer media queries.
He said that “the company reserved our right to reply when we deemed it fit on advice of your legally council (sic)”.