This is following publication of the consumer’s plight in Personal Finance earlier this month.
Lewis and Philip Nortje, the debt counsellor who is assisting the consumer, could not agree on the application of section 103(5) of the National Credit Act (NCA), which limits the charges, including interest and fees, that can be levied on a consumer in default.
Nortje also contended that the credit was granted recklessly, because Lewis’s assessment of the consumer’s affordability included her husband’s income, but not his expenses. Furthermore, Nortje said the consumer, who is Xhosa-speaking, had a poor grasp of English and did not understand her obligations under the credit agreement.
In response to the charge of reckless lending, Lewis said it was the company’s policy to provide customers with documentation in the language of their preference.
Lewis’s records indicated that the consumer selected Xhosa as her language of preference and that as such, all documentation provided to her was in Xhosa, Lewis alleged.
However, Lewis said it was unable to locate its copy of the original signed agreement, but that it had “unsigned copies” of the consumer’s documents, including the credit agreement, in Xhosa on file.
In a letter to Nortje last week, Lewis’s manager of debt recoveries, Alta Coetzee, said that “despite all of the above, and given that she has paid a significant amount towards the settlement of her debt, we are willing, on a without prejudice basis, to accept your proposal of reversing the amount of R7173.61, closing her account and clearing her credit record.”
The offer was made on the basis that it does not in any way constitute admission of liability by Lewis and that the consumer withdraws her contentions against Lewis.
Nortje says he’s happy Lewis accepted his proposal and he’s keen to continue engaging Lewis on its interpretation of section 103(5) of the NCA - also known as the statutory in duplum rule.
In common law, the in duplum (meaning to “double the amount”) rule provides that interest on a debt will stop running once arrear interest has accrued to an amount equal to the outstanding principal debt. But the NCA introduced statutory in duplum to cap not only interest, but all other costs. In 2009, the National Credit Regulator sought a declaratory order from the courts as to how statutory in duplum should be applied. The order issued by the North Gauteng High Court, and later upheld by the Supreme Court of Appeal in 2011, said that once the charges on a default debt (charges such as initiation fees, service fees, interest, credit insurance costs, default administration charges and collection costs, listed in section 101 of the Act) equal the amount of the unpaid balance at the time of default, no further charges may be levied, and any payments made by the consumer thereafter do not permit the credit provider to charge any further interest and charges while the default persists.
Clive Rosenberg, the consumer’s employer, says that when he explained Lewis’s offer to her this week, “she was overwhelmed with gratitude [to him and to Nortje]”.