Predatory lenders ‘are violating your rights’

IT WAS Human Rights Day last week and as South Africans reflect on their rights and freedoms, a critical issue facing millions is the scourge of debt abuse and predatory lending.

- SEBASTIEN ALEXANDERSON

With an eminent result of over 42% of the country’s 23 million credit-active consumers classified as impaired, the threat is more than a financial statistic.

The consistent violation of the Right to Protection from Unfair Lending and Debt Abuse under the National Credit Act (NCA) of 2005 is a serious concern.

The scourge of reckless lending

Despite the NCA mandating thorough affordability assessments by lenders to prevent reckless lending, many South Africans still end up in debt spirals. The allure of easy credit masks the harsh terms that often come attached, exploiting consumer vulnerabilities and leading to situations where loans are nearly impossible to repay.

In our experience, too many consumers are unaware of the risks until they are in over their heads. Reckless lending isn't just a failure of regulation; it's often a failure of knowledge..

Global context and local impact

Globally, the issue of consumer over-in- debtedness resonates in corridors from North America to New Zealand, with studies highlighting a common theme: alack of consumer understanding cou- pled with aggressive credit expansion by lenders. In South Africa, historical inequalities and economic pressures compound these challenges.

Exploitation of Social Grant Beneficiaries