National Credit Act, No 34 of 2005 (NCA): Implementation and Enforcement of the Affordability Assessment Regulations

The National Credit Regulations including Affordability Assessment Regulations (AAR) became effective on 13 March 2015. Thereafter the regulations were suspended on 21 August 2015 for a period of six calendar months from 13 March 2015.

Accordingly, the AAR has again come into effect as from 13 September 2015 and is applicable to all current, prospective and joint consumers, all credit providers and all credit agreements to which the NCA applies, with a few exceptions. In this regard, the AAR now places an obligation on credit providers to inquire whether consumers are able to afford the credit to be extended, based on the availability of a consumer’s discretionary income. Credit providers should ensure compliance with the AAR, if the credit agreements provided to their consumers fall within the purview of the AAR. If this is not done, the credit agreement could be declared reckless with the result that the consumer’s rights and obligations under that agreement could be set aside or the force and effect of that agreement could be suspended.