Last year the South African public collectively paid out R100bn on interest payments and credit fees
South Africa does not have an established consumer activism culture, which is holding people back from becoming economically empowered, according to experts attending the Consumer Rights Day Conference yesterday.
"Consumer activism is not alien to our history," said Competition Commissioner Shan Ramburuth. "We saw a widespread wave of strikes and consumer boycotts [in the 1970s, but more important issues at the time meant that consumer activity has never really taken root in our society."
Reserve Bank Governor Tito Mboweni warned that household credit levels, which are above 70 percent of disposable income, remained a potential danger.
"In the past three years we have seen household consumption expenditure increasing at a very high rate. Household debt is on the dangerous side. We have to be careful in this country," he said.
National Credit Regulator chief executive Gabriel Davel said that R100billion was spent last year on interest payments and fees for credit, and it is estimated that 60percent of adult South Africans don't know what an interest rate is or had not even heard of the term.
Davel said that the National Credit Act, which would come into effect in June, would make it easier for consumers to know how much they would be paying and would put a limit to the amount of compounding interest that a customer would pay.
"Those two sections of the act are unique to any legislation in the world," Davel said.
"With the pre-agreement disclosure stipulation, any credit provider that gives a cost for credit will be obliged to use a standardised one page document that will give crucial information [such as the repayment amount and interest rate]."
"We currently have a case where a client took out a loan for R8000 and now owes about R120000," Davel said.
"When the act comes into effect there will be an end to such practices."
Independent Democrats leader Patricia de Lille made an emotional presentation appealing to consumers to hold the public and private sectors accountable for everything they did.
"Poor people in this country are very gullible and have a great need to eat and to survive. Lets not exploit them. Once they are in the debt trap they will never be able to get out," she said.