Sun Sep 24 07:14:11 SAST 2017

Shoprite gets slapped with R1m for wobbly furniture deals

By Wendy Knowler | 2017-09-06 13:32:41.0

The Shoprite group has been found guilty of reckless lending and fined R1-million for approving furniture credit deals for consumers on the basis of what the National Credit Regulator (NCR) regards as irregular affordability assessments.

The National Consumer Tribunal’s judgement arose from the regulator’s investigation into the lending practices of Shoprite’s House & Home division‚ which kicked off with investigators visiting Shoprite’s head office in 2015‚ where they asked to see a random selection of House & Home credit agreements signed between 2013 and 2015.

They also asked to see evidence of the credit bureau checks done by the company on the consumers applying to buy furniture on credit‚ along with documentation which they had presented to prove they could afford to repay the loan‚ as required by the National Credit Act‚ such as proof of income.

“We found some very unacceptable things‚” said the NCR’s senior legal adviser‚ Nthupang Magolego.

“They assumed in some cases that if a women was married‚ her spouse’s income would contribute to repaying the loan‚ without checking whether he was employed‚ and in one case‚ the company noted that a consumer would be able to afford the repayment three months later when her credit card was paid off‚ without considering how she’d cope for those first three months‚” Magolego said.

“Even worse‚ one applicant was deemed to be able to afford the repayment by drawing on his bond‚ which goes against the basic concept of affordability‚” she said. “Affordability should be assessed on income‚ not access to credit.”

The consumers themselves were not contacted by the NCR investigators‚ and their agreements were analysed regardless of whether or not they had defaulted‚ Magolego said.

“The NCR believes that this judgment by the tribunal reaffirms the undesirability of reckless lending in our society‚” said the NCR’s chief executive‚ Nomsa Motshegare.