Edgars stores holding company Edcon argued in court yesterday that it had not flouted the National Credit Act.Photo: Reuters
JOHANNESBURG - The North Gauteng High Court has reserved judgment in the appeal by Edcon against the National Credit Tribunal (NCT) declaration that it had flouted the National Credit Act (NCA) by requiring the payment of club fees in terms of its credit agreements.

Yesterday Edcon’s senior counsel, Chris Loxton, argued before Judge J Louw that the NCT had made errors in its judgment and that it had not established what conduct Edcon had breached.

“The one thing which the tribunal was obliged to find was that the credit agreement obliged consumers to pay club fees.

"No such finding was ever made. In the absence of that finding, there can never be a breach of Section 101,” Loxton said.

National Credit Regulator (NCR) referred a complaint to the NCT, asking for a declaration by the NCT that Edcon had contravened the NCA by requiring the payment of club fees in terms of its credit agreements.

In April the NCT hit Edcon, South Africa’s largest clothing retailer, with an order to pay an administrative penalty equal to 10 percent of annual turnover, after finding that it had contravened Section 101 of the NCA by adding the club fee to its credit agreement.

It also ordered Edcon to refund members who from 2007 to date had been charged club and membership fees.

However, Edcon, whose brands include Jet, CNA and Boardmans, appealed the NCT’s judgment, contending that the programme was a product and had nothing to do with the cost of credit.

An Edcon spokesperson said yesterday: “The tribunal has interpreted this membership fee as a cost of credit and therefore it should not be debited to customer accounts.

"It remains our contention that the club programme is a product and has nothing to do with the cost of credit.”

The club fee entitles members to products ranging from a magazine, emergency roadside assistance, funeral cover and discounts in various products, including air tickets and car hire.

Members can access a service by paying a monthly fee of R30.90 for the “Jet Club” option, or R60 a month for the “VIP” option.

The NCT’s judgment comes after an NCR investigation into the furniture retail business, amid suspicion that retailers might be charging consumers club fees under the credit agreement, in contravention of the act.

The NCR alleged that Edcon had generated an income from club fees, according to its annual report for the financial year ending March 2015.

Last year the NCR referred Edcon’s rival, Foschini, to the NCT, following an investigation which had revealed that the company had charged consumers a club fee on credit agreements.

The club fee charged by Foschini is reflected in consumers’ credit agreements.

The charging of a club fee on credit agreements is not permitted by the NCA.