CAPE TOWN – Summit Financial and 10 of its indebted clients have challenged lending industry bodies and regulators in court about the manner in which debt collection practices unfairly prejudices credit consumers who have a debt judgment.
The judgment, likely to be delivered before year-end after evidence was received by Acting-Judge Bryan Hack, has the potential to dramatically impact the financial landscape and economy, by immediately releasing millions of credit consumers from their debts, and injecting more than R1 billion into the economy, Summit chief executive Clark Gardner said at a briefing yesterday.
Almost every judgment collected via garnishee deductions – there are about 1.3 million in force currently – has breached one of the laws being challenged, meaning almost every consumer in this position could be due for a refund, he said.
The judgment’s outcome will hinge on two possible outcomes: the first would be around the interpretation of common law relating to the maximum repayable on a debt, by a consumer with a debt judgment.
Summit interpreted the law as stating the maximum is two times the debt, from the time that the debt was incurred, while the National Credit Regulator (NCR) and other industry bodies such as the Banking Association of South Africa (Basa), interpret the law as meaning that the recoverable debt maximum also becomes applicable on the day of the debt judgment, thus making it possible for creditors to claim up to more than four times the original debt from the consumer.