Clothing retailer giants Truworths, Foschini and Mr Price took the Minister of Trade and Industry to court to set aside the current requirement in the National Credit Act (NCA) that credit applicants need to produce three months' payslips or bank statements as proof of income and they won.
Speaking to Azania Mosaka, General Counsel (Legal) at TransUnion, Jeannine Naude-Viljoen, said one would recall that the NCA was amended a few years ago and those amendments imposed stricter affordability criteria for lenders to apply.
This was essentially to prevent reckless affordability practices and also to force lenders to make accurate affordability assessments.— Jeannine Naude-Viljoen, General Counsel (Legal) at TransUnion
She adds that the repercussions to the act amendments is that some consumers found themselves excluded from obtaining credit.
Naude-Viljoen said one of the reasons why these retailers fought this matter is that they are exposed to a number of consumers who apply for store cards or smaller loans.
And those are typically people that are entrepreneurs or people that are informally employed that are able to service a loan but don't necessarily have those supporting documentations to prove their income.— Jeannine Naude-Viljoen, General Counsel (Legal) at TransUnion
Listen to Naude-Viljoen explain more on credit applications...