Correction:

This story has been amended:  We said the bank was instructed by the Ombudsman for Banking Services to write off all the loans. This was not the case, the bank offered to write off all monies owed after conducting an internal forensic investigation. We apologise for the error.

___________________________________________________

Ubank has learnt the hard way not to lend its clients more than they can afford to repay.

It was found to have recklessly lent mineworker Mojalefa* R225 727 over five months without a proper credit assessment.

The National Credit Act states that a credit agreement will be deemed to be reckless if the credit provider fails to conduct an assessment or fails to foresee the loan will make the consumer over-indebted.

Mojalefa, who is from Lesotho and employed by Harmony Gold Mine, earns R6 792 a month and was required to repay R9 563 a month on his four loans.

He applied for a R17 967 loan from Ubank in 2015. While he was still paying off the loan, he applied for three more loans in the same year.

Last month Ubank offered to write off R225 726.47 related to the four personal loan accounts linked to Mojalefa.

This after Ithuseng Credit Solutions, which provides credit health improvement services to Harmony Gold employees, lodged a complaint against the bank on Mojalefa's behalf.

Ubank lent him R72 118 in March, a further R6 722 in April and R71 391 in May.

Mojalefa said he could not afford to repay them.

Ithuseng chief executive Magauta Mphahlele said Ubank told her company that the loans were not supposed to have been granted.

Ubank said a system error resulted in the three loans being granted.

Ithuseng then referred the matter to the OBS, who agreed that the four loans were reckless, Mphahlele said.

She said they were pleased with this finding as it was difficult to prove reckless lending.

"This is because consumers sometimes fail to declare their true monthly financial commitments or are sometimes not asked the right questions by credit providers regarding their monthly expenses," Mphahlele said.

She said credit providers cannot hide behind system failures as they should ensure that each and every approved loan complies with the affordability assessment requirements of the National Credit Act.

Ithuseng is registered with the National Credit Regulator as an alternative dispute resolutions agent and debt counselling company.

It assists employers to combat over-indebtedness in the workplace by investigating payroll abuses that occur as a result of illegal and unaffordable garnishee and administration orders.

It also provides debt-relief solutions to employees who struggle with their debt or who get rejected for mortgage and vehicle loans due to bad credit records.

It is also empowered to mediate disputes between credit bureaus, debt counsellors and non-bank credit providers.

*Not his real name