Loan company exploited social grant beneficiaries

The high court in Johannesburg has declared that it is unreasonable to offer social grant beneficiaries insurance for disability and retrenchment if they are already disabled or unemployed.

- Ohene Yaw Ampofo-Anti

An insurance product offered by credit provider JDG Trading included cover for disability and retrenchment. But disabled and unemployed clients, mostly social grant beneficiaries, would never be able to make a claim for disability or retrenchment.

The court ruled recently that this exploited social grant beneficiaries who took out loans from JDG Trading and infringed on their constitutional right to social assistance.

JDG Trading offers loans to social grant beneficiaries for household goods and furniture. Customers are required to insure the loans, and can purchase insurance from JDG Trading directly or another provider. Because JDG Trading's insurance bundle included cover for disability and retrenchment, and many of its clients are already disabled or unemployed, the National Credit Regulator took JDG to the National Credit Tribunal, arguing that the insurance policy was unreasonable and against the National Credit Act.