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The National Credit Regulator (NCR), has referred TFG, whose brands include Foschini, to the National Consumer Tribunal for breaching the National Credit Act (NCA) following an investigation that found it charged consumer club fees on credit arrangements.

The NCR, which regulates the credit industry, said on Tuesday that it wanted the tribunal to order TFG to refund affected consumers the club fees charged and to compel the group to conduct an independent audit into its loan book to determine the number of consumers to be refunded.

It said it also wanted the tribunal to interdict TFG from charging consumers a club fee on credit agreements and to impose an appropriate administrative fine on Foschini. NCR senior legal advisor Nthupang Magolego said retailers were abusing the system.

“The club fee deduction from credit agreements is an easy way for retailers to make. We expect TFG to oppose the referral, because a lot of money is at stake,” she said.

Magolego said the NCR also wanted the tribunal to impose a 10percent fine on TFG’s annual turnover for 2016 when the investigation was launched.

She said that the refunds would be with effect from 2007 when the NCA was made into law. “We are confident of our case because the tribunal rule in our favour in the Edcon case and the company has appealed the tribunal ruling,” she said.

TFG confirmed the referral yesterday, saying that it was because the NCR viewed its Club and SuperClub subscription products as unlawful. It said it would be opposing the referral, charging that the country’s biggest fashion retailers such as Edcon and Mr Price as well as furniture store Lewis also sold such products.

“TFG is of the view that its referral is incorrect, as the NCA does not limit which products retailers may sell to its customers on their credit accounts. This was also recently confirmed by the National Consumer Tribunal in the Lewis case. TFG will be opposing its referral to the National Consumer Tribunal,” it said.

TFG, which has a market capitalisation of R30.89billion, said its club products were optional with insurance and other benefits which could be subscribed to at application stage, or later via telemarketing. It said the subscriptions could be cancelled by customers at any time without penalty.

Jacqueline Peters, a manager in the NCR’s investigations and enforcement department, said that charging a club fee on credit agreements was not permitted by the NCA.

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“The NCA allows consumers to be given a quotation which sets out the cost of credit before signing credit agreements. Consumers should request this quotation from their credit providers so that they can properly check the cost of credit that is being offered”, she said.

Chris Gilmour, an independent investment analyst, said the NCR decision would have little impact on the company’s reputation. He said that the company would not be affected if it presented its case to the NCR and the tribunal to say their intent was not to circumvent the law.

“People who sign up for club cars are not bothered about whether or not companies adhere to laws,” Gilmour said. “They are looking for good deals.”