Truworths, the Foschini Group and the Mr Price Group are gearing up for a legal battle with the Minister of Trade and Industry and the National Credit Regulator over the affordability assessment regulations issued in terms of the National Credit Act (NCA).

The clothing retailers have filed a notice in the Cape High Court of their intention to raise a constitutional question. The purpose of such a notice, filed in terms of the rules that govern High Court proceedings, is to enable any potential interested parties, known as amicus curiae (friends of the court), to join in proceedings.

The retailers are seeking an order from the court to set aside and declare “unlawful and constitutionally invalid” parts of the affordability assessment regulations.

They contend that the regulation that compels a credit provider to validate a consumer’s income – by obtaining the consumer’s latest three payslips or latest three bank statements showing the consumer’s salary deposits – has resulted in the denial of credit to “a significant number of consumers”.

This, they say, is because consumers have been unable to furnish the retailers with such documents, not because they have failed the credit provider’s risk assessment or affordability calculation as prescribed in the regulations.

The clothing retailers say this denial of credit does not advance the purposes of the NCA, which is to promote the development of a credit market that is accessible to all South Africans, particularly those who historically have been unable to access credit.

The notice says “data shows that the prospective consumers who are the most affected by this regulation are predominantly black (particularly African women), either self-employed or casually employed, and/or active in the informal sector”.

A significant number of these consumers are being denied credit “solely because they are unable to produce the required documentation … As a direct result, retailers have suffered, and will continue to suffer, extensive financial loss, to the extent that there is a real risk of harm to the economy,” the notice says.

Lesiba Mashapa, the company secretary for the National Credit Regulator, says the regulator will file a response to the notice in due course.