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Financially “stretched” consumers cautioned against using unregistered credit providers
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With the start of the year being financially demanding, the Gauteng Department of Economic Development has encouraged consumers, who will be borrowing money from credit providers, to be wise and ensure that credit providers do not violate their rights.
This as some consumers could be facing financial challenges to the extent that they might need to apply for credit to meet their financial obligations such as school fees, school uniforms, transport and rent, among others.
Consumers have been cautioned against using unregistered credit providers such as ‘Abomashonisa’ that overcharge interest, and take consumers’ identity documents and their Social African Security Agency (SASSA) cards to enforce payment.
“This is unfair business practice. Sometimes, when consumers’ credit applications decline, consumers resort to borrowing from Abomashonisa. However, this does not help the consumer because of the exorbitant interest rates that are charged by these unregistered credit providers.
“If your application is declined by all registered credit providers, it means that you have a bigger financial problem than you realise. Rather seek assistance by negotiating for lower instalments with your current credit providers, paying off and closing some accounts than accessing more credit through unregistered credit providers,” Gauteng Department of Economic Development Director for Education, Awareness and Stakeholder Relations Milly Viljoen said.
According to the Consumer Protection Act (CPA), consumers have a right to receive information in plain and understandable language.
“Consumers should read and understand the terms and conditions, and further ask questions if they seek clarity. This will allow them to understand Credit Life Insurance, which can be a lifesaver when they are unable to repay the debt due to loss of income, unemployment, disability, etc,” Viljoen said.
Consumers are urged to consider the following tips:
- Borrow only when it is necessary. Avoid using credit for consumables such as groceries.
- Verify the authenticity of credit providers, even the ones that are advertising on social media, by contacting the National Credit Regulator first before applying for credit. Unregistered credit providers will make you more financially constrained by overcharging interest.
- Understand the additional cost that comes with credit. The cost of credit includes interest rates, once-off initiation fees, monthly service fees, credit life insurance, etc. Consumers should read and understand the pre-agreement statement and quotation which will include all the costs involved.
- Do not sign immediately when applying for credit. The pre-agreement or quotation has five (5) days cooling period. Sign ONLY when you understand the terms and conditions.
- Do not sign a blank credit agreement/document. Read, understand, and ask relevant questions if you seek clarity. Sign ONLY when satisfied with the terms and conditions.
- Check your credit report often- You are entitled to a free credit report once a year. You have the right to dispute any information that is wrongfully written on your credit profile.
- Do not agree to pay an ‘upfront fee’ when applying for credit. Fake credit providers may force you to pay a fee before granting you credit.
The Gauteng Office of Consumer Affairs works with different stakeholders in consumer protection to ensure that consumer rights are protected.
Thus, consumers should contact the National Credit Regulator on 0860 627 627 or e-mail complaints@ncr.org.za to report unregistered credit providers or any credit provider that violates their consumer rights in the credit industry. - SAnews.gov.za
nosihle
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Borrow money wisely this January, National Credit Regulator advises
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January can be a difficult month, especially for those who did not budget and/or spend wisely over the festive season.
According to the National Credit Regulator (NCR), many people are paid earlier in December and they wait long until the next payday in January.
“This long wait leads to very empty pockets and many unpaid bills, as these consumers start the year on a tough note. Consequently, many are being forced into taking excessive credit as the only option to pay for necessities like rent or mortgage, food, school fees, stationery and so on,” the regulator said.
The NCR’s Education and Communications Manager, Poppy Kweyama, said in addition to the high cost of living, consumers might need to borrow excessively at this time of the year because of poor budgeting and last year’s reckless spending.
Citing the NCR’s statistics for the quarter ended September 2023, Kweyama said there has been an increase quarter-on-quarter of impaired accounts.
To avoid an impaired credit record, consumers are advised to borrow wisely and responsibly and restrict credit to only what is necessary.
She added that during this time of the year, some consumers are desperate for financial assistance and may take out loans recklessly, even from unscrupulous credit providers.
The NCR has implored consumers who find themselves in this situation to be credit-smart and avoid resorting to unregistered credit providers.
She advised consumers to borrow only from registered credit providers and only as much as they need and only when they need to.
According to the expert, it is also crucial to plan how to repay the loans, and most importantly determine whether they can afford the repayments.
The NCR also encourages consumers to understand their credit agreements and the terms and conditions (Ts and Cs) before signing.
“Don’t sign if you don’t understand the Ts and Cs. Always ask for clarity and never pay an upfront fee.
“Never leave your ID or bank card with a credit provider in exchange for a loan. Not only is this practice illegal, but remember, to register and exercise your vote in the 2024 elections, you need to have your ID,” Kweyama cautioned.
Credit is expensive, said the NCR, and it advised people to familiarise themselves with the fees associated with the credit.
According to the National Credit Act (NCA), consumers can only be charged the following fees when taking up credit:
• Initiation fees – This is a fee that a credit provider charges a consumer for entering into a credit agreement. The credit provider must give the consumer an option of paying this fee separately and once off. In doing so, no interest may be charged on the fee. Initiation fees are regulated by the NCA. Standard initiation fees for credit facilities, short term credit transactions and unsecured credit transactions, per the NCA, is R165 per credit agreement plus 10% of the amount over R1 000 but the maximum initiation fee should not exceed R1 050.
• Interest rate – Interest is the amount that a credit provider charges a consumer on the outstanding balance of a credit agreement and is regulated by the NCA.
• Service fees – The fee that a credit provider charges for servicing and administering or maintaining the credit agreement. The credit provider can charge this fee monthly. Service fees can also be charged per transaction. The maximum monthly service fee under Section 105 of the NCA is R60.
• Credit Life Insurance – This is insurance which can be required by the credit provider when a consumer applies for credit. The insurance covers the debt due to the credit provider in certain cases such as retrenchment, disability or even death of the consumer. The insurance cover taken may not exceed the outstanding obligation to the credit provider.
• Other costs will depend on what you are purchasing as the consumer such as delivery costs. – SAnews.gov.za
Gabisile
Wed, 01/10/2024 - 09:39
273 views
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Hollard gains East Africa foothold in deal with Kenya’s APA Insurance
Hollard International (https://apo-opa.info/3tUpGWD) will extend its footprint in Africa through the finalisation, on 31 October 2023, of an agreement to acquire a significant interest in Apollo Investments Limited, the holding company of Kenya-headquartered insurer APA Insurance.
This strategic investment, subject to regulatory approvals, gives Hollard International a presence in the East African market, supplementing its existing operations in Southern and West Africa.
Hollard becomes the second international investor in the Kenyan group, following Swiss Re, which acquired a stake in 2014.
For APA, the partnership gives Kenya's second-largest insurer access to a larger market and expanded opportunities for growth, says Ashok Shah, Group CEO of Apollo Investments Limited.
“It's an exciting time for APA because the Hollard International partnership will open new doors and new avenues of growth for our business. We'll have access to substantial new expertise in classes of business such as Motor, Engineering, Marine and other specialist lines of insurance – which we believe will open up a number of profitable business opportunities.”
Expressing the significance of the partnership, Shah notes, "In addition to expanding our operations in Kenya, this venture will also enable us to strengthen our foothold in Uganda and Tanzania. Moreover, it positions us favourably to seize opportunities in the Ethiopian market once it becomes accessible.”
Pravin Kalpagé, CEO of Hollard International, is equally upbeat about the transaction, heralding it as “a vote of confidence in the Kenyan and East African markets”.
He says, “Hollard International has been looking for an East African partner for some time, and APA ticked so many boxes – it has an established track record, an impressive value proposition with strong broker and customer relationships, and it shares our values around community, reliability and customer-centricity. All these elements resonated strongly with us.
“This investment continues Hollard International's African model of finding strong local businesses and management teams with whom to partner in-country, rather than parachuting expatriates into a new market.”
He adds that exploring options in Francophone West Africa is next on Hollard International's to-do list.
Kalpagé has also pledged to bring Hollard International's model of “impact beyond insurance” to the East African market – as demonstrated in Mozambique and Ghana, among other countries.
Hollard Mozambique has developed risk-mitigation insurance products to protect smallholder and subsistence farmers – whose livelihoods are totally reliant on their crops – from extreme weather events through a partnership with local seed providers.
In Ghana, the MeBanbo microinsurance product arose from a partnership between Hollard Life, Vodafone Ghana and Sasai Fintech, a business of Cassava Technologies. It offers accessible, affordable life insurance cover, via an end-to-end digital platform, to the underserved Ghanaian market.
“This focus on being a catalyst for social impact in Africa is in line with Hollard's business purpose, which is to enable more people to create and secure a better future,” concludes Kalpagé.
In South Africa, Hollard is the largest privately owned insurance group, offering both life and non-life product suites. Hollard International extends insurance solutions outside of South Africa through operations in Namibia, Mozambique, Zambia, Lesotho, Botswana and Ghana, with East Africa (Kenya, Uganda and Tanzania) being added to the list through the APA transaction.
APA Insurance is owned by Apollo Investments Limited, which was founded in 1977 with a mission to provide “present and future peace of mind to the East African market and, in turn, enhance the quality of life for both our clients and loved ones”. Built on commitment, integrity and innovation, Apollo has since become one of the leading financial services groups in East Africa, with six companies under its belt.
Issued by Flow Communications on behalf of Hollard.
Distributed by APO Group on behalf of Hollard.
For more information or to arrange an interview, please contact Khaya Thwala on khayat@flowsa.com or +27 78 349 0668.
About Hollard International:
In South Africa, Hollard is the largest privately owned insurance group, offering both Life and Non-Life product suites. Hollard International extends insurance solutions outside of South Africa through operations in Namibia, Mozambique, Zambia, Lesotho, Botswana and Ghana, with East Africa (Kenya, Uganda and Tanzania) being added to the list through the APA transaction. https://apo-opa.info/3tUpGWD
About APA Insurance:
APA Insurance is part of the Apollo Group, one of the leading insurance groups operating in East Africa, providing a broad array of insurance solutions across Kenya, Uganda and Tanzania. APA is one of Kenya's largest non-life insurers and provides access to Motor, Liability, Agriculture, Property and Health insurance as well as a unique range of micro-insurance products. APA Life Assurance is one the fastest growing life insurance companies in Kenya providing Individual Life, Savings, Investments and employee benefits solutions including Group Life, pensions and Annuities. Its other primary insurance business units include APA Life Insurance, APA Insurance in Uganda; an asset management company, Apollo Asset Management; and a property company, Gordon Court. The Apollo Associate in Tanzania is Reliance Insurance Company. https://www.APAInsurance.org/
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