Howard Gabriels, the Lead Ombud for the Credit Division at the NFO
The National Financial Ombud (NFO) has reaffirmed its commitment to protect credit consumers from exploitation and unfair treatment – including reckless lending – as it endorses Freedom Month when the right to dignity and equality is celebrated.
On 27 April South Africa will celebrate the 31st birthday of democracy when on this day in 1994, the first democratic elections were held, ushering in a better future for all. Since then Freedom Day on 27 April each year, commemorates the end of Apartheid and the dawn of a new era of hope and possibility.
In a country where the right to dignity and equality remains central to our democracy, access to fair credit practices is a right that the NFO takes seriously, says Howard Gabriels, the Lead Ombud for the Credit Division at the NFO.
“Through our daily work of resolving disputes between consumers and credit providers, the NFO is holding all non-bank credit providers to the highest standards of fairness, transparency, and accountability in their dealings with their customers,” he said.
The NFO said it continues to receive complaints relating to maladministration in the credit industry, including disputes over inaccurate loan balances; unexpected changes to repayment terms; questionable interest, fees and charges; and disputes over prescribed debts.
“In this month when South Africans reflect on their hard-won freedoms, we are reminded that financial freedom is part of the broader human rights agenda.
“As the NFO, we have a duty to protect consumers from exploitation and ensure that credit providers act ethically and in accordance with the law. It is our mission to help consumers not only resolve disputes but also reclaim financial agency and stability,” said Gabriels.
The NFO serves as an independent and impartial body, offering free dispute resolution services to consumers who engage with micro-lenders, retail clothing and furniture stores, and providers of non-bank loans, including vehicle and home finance.
According to Gabriels, in more than 60% of the non-bank credit-related cases brought before the NFO, the findings were in favour of the complainant. These outcomes are not just about correcting wrongs; they also often lead to improved financial outcomes for consumers, including the restructuring or writing off of unfair debt.
Reckless lending
The NFO referred to reckless lending as one of the types of complaints against non-bank credit providers and cited a case when it won a fair and just outcome for the consumer.
The consumer approached the NFO, stating although his income could not cover both his living expenses and a new loan repayment, the credit provider maintained that an affordability assessment had been completed and the consumer qualified.
Upon investigation, the NFO found that while the assessment appeared to meet the formal requirements of the National Credit Act (NCA), the provider had overlooked multiple large, unexplained cash withdrawals. These should have raised red flags and prompted further enquiry into the consumer’s actual obligations.
Quoting a recent National Consumer Tribunal judgment, the NFO reminded credit providers that affordability assessments are not tick-box exercises. The credit provider in this case failed to probe the consumer’s financial behaviour adequately. As a result, the NFO recommended that all interest and fees associated with the loan be written off, an outcome the provider accepted.
Misuse of fraud listing
In another case, a consumer was listed for fraud with the Southern African Fraud Prevention Services (SAFPS) after defaulting on a rental agreement. The consumer argued that the default was due to financial hardship and not fraudulent intent.
Initially, the provider cited the SAFPS fraud category “misuse of account through fraudulent conduct” to justify the listing. However, upon deeper investigation and consideration of the consumer’s history, including her early compliance and financial struggles exacerbated by the COVID-19 pandemic, it was found that no intentional deception had taken place.
The NFO concluded that the matter was a breach of contract rather than fraud and recommended the fraud listing be removed. The provider accepted this recommendation and agreed to stop the practice of using SAFPS fraud listings in similar contractual default cases going forward.
Consumer responsibility
While the NFO continues to hold credit providers accountable, Gabriels stressed that consumers also have a vital role to play. He offered the following Tips To Consumers For Financial Freedom:
- Review your credit agreements and monthly loan statements for accuracy.
- Check your credit report regularly for discrepancies or suspicious accounts.
- Keep records of all signed agreements, correspondence, and proof of payments.
- Raise concerns promptly with your credit provider and if unresolved, approach the NFO for assistance.
“True freedom includes financial fairness,” Gabriels concluded.
“This April, as we honour our democratic values, let us also commit to creating a credit system that protects, empowers, and uplifts every South African.”
ENDS
