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IN THE NATIONAL CONSUMER TRIBUNAL HELD AT CENTURION

Case number: NCT/103940/2018/57(1)

In the matter between:

NATIONAL CREDIT REGULATOR APPLICANT

and

LEON ANTONIUS DU PLESSIS Nomine Officii FIRST RESPONDENT

EULIEN DU PLESSIS Nomine Officii SECOND RESPONDENT

PCL TRUST (IT5627/07) THIRD RESPONDENT

Coram:

Dr M Peenze – Presiding member

Mr T Bailey – Tribunal member

Adv J Simpson –Tribunal member

Date of hearing – 05 March 2020

Date of judgment – 05 April 2020

JUDGMENT AND REASONS

THE PARTIES

Applicant

1. The Applicant is the NATIONAL CREDIT REGULATOR (the Applicant), a juristic person

established by section 12 of the National Credit Act, 2005 (the Act) with its physical address at 127

- 15th Road, Randjiespark, Midrand, Johannesburg, Gauteng.

2. Ms Leanne Schwartz, who is a senior legal adviser in the Applicant‟s Investigations and

Enforcement Department, represented the Applicant at the hearing of this application.

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Respondents

3. The First Respondent is LEON ANTONIUS DU PLESSIS Nomine Officii, an adult male cited

herein in his official capacity as trustee of the PCL Trust, Master‟s Office registration number

lT5627/07 (Master of the High Court Pretoria), with last known physical address being Afrikaans

Protestant Church, 141 Springbokvlakte Drive, Montana, Pretoria.

4. The Second Respondent is EULIEN DU PLESSIS Nomine Officii, an adult female cited herein in

her official capacity as trustee of the PCL Trust, Master‟s Office registration number IT5627/07

(Master of the High Court Pretoria), with last known physical address being Afrikaans Protestant

Church, 141 Springbokvlakte Drive, Montana, Pretoria.

5. The Third Respondent is PCL TRUST (Master‟s Office registration number: lT 5627/07), situated

at 28 Songozwi street, Louis Trichardt.

6. PCL Trust is a trust as defined in the Trust Property Control Act 57 of 1988, the assets and

liabilities of which vest in the First and Second Respondents as trustees. The PCL Trust also

trades as “Prestige Cash Loans”.

7. The Third Respondent is a registered credit provider as from the 10th of September 2007 under

registration number NCRCP1520 and also seems to have been registered under registration

number NCRCP 3061.

8. The Respondents represented themselves at the hearing of this application.

9. The matter was set down on an opposed basis.

JURISDICTION

10. In addition to its other powers in terms of the Act, section 150 gives the National Consumer

Tribunal (the Tribunal) the power to make an appropriate order concerning prohibited or required

conduct in terms of the Act or the Consumer Protection Act, 2008.

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11. This power includes declaring conduct to be prohibited in terms of the Act; interdicting prohibited

conduct; confirming an order against an unregistered person to cease engaging in an activity that

must be registered in terms of the Act; requiring payment to the consumer of an excess amount

charged together with interest set out in an agreement, or any appropriate order required to give

effect to the Act.

ISSUES TO BE DECIDED

12. The Tribunal is required to determine whether the Respondent engaged in prohibited conduct by

having repeatedly contravened the provisions of the Act, regulations and general conditions of

registration; and whether to impose an administrative penalty on the Respondent

13. The allegations of prohibited conduct will become apparent in the course of this judgment.

TERMINOLOGY

14. A reference to a section in this judgment refers to a section in the Act. A reference to a regulation

refers to the National Credit Regulations, 2006 (the regulations).1 A reference to a condition or

general condition refers to the Respondent‟s conditions of registration as a credit provider in terms

of section 40 (the conditions).2 A reference to a form refers to a Form as prescribed in the

regulations.

APPLICATION TYPE AND RELIEF SOUGHT

15. The Applicant lodged an application in terms of section 57 of the Act, dated the 28th of March

2018, to cancel PCL Trust‟s registration as a credit provider. 3

1 Published under Government Notice R489 in Government Gazette 28864 of 31 May 2006

2 Section 40 empowers the National Credit Regulator to impose conditions on the registration of an applicant as a credit

provider

3 Section 57 (1) empowers the Tribunal to cancel a registrant's registration if the registrant fails to comply with a condition of its registration; contravenes the Act; or fails to comply with a commitment the registrant made when applying to be registered as a credit provider

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16. The Applicant requests an order in terms of section 150 as follows:

16.1 Declaring the Respondents to be in repeated contravention of the following sections of the Act,

regulations and conditions:

16.1.1 Section 52 (5) (c) read with General Condition 7 of its Conditions of Registration;

16.1.2 Section 76;16.1.3

16.1.3 Section 52 (5) (b) read with section 52 (5) (c) and general condition 5 of its Conditions of

Registration;

16.1.4 Section 92 (1) read with Regulation 28 (1) (b) and Form 20;

16.1.5 Section 170 read with Regulation 55 (1) (b) (v);

16.1.6 Section 81 (2) (a) (ii) read with regulation 23A;

16.1.7 Section 81 (2) (a) (iii) read with Regulation 23A;16.1.8;

16.1.8 Section 81 (3) read with section 80 (1) (a);

16.1.9 Section 81 (3) read with section 80 (1) (b);

16.1.10 Section 170 read with Regulation 55 (1) (b) (vi); and

16.1.11 Section 92 (2) read with section 90 (2) (l) (i) of the Act;

16.2 Declaring the repeated contraventions as prohibited conduct in terms of section 150 (a);

16.3 Cancelling PCL Trust‟s registration as a credit provider with the Applicant in terms of section 150

(g) of the Act;

16.4 Declaring credit agreements to have been recklessly extended in the event of PCL Trust failing

to conduct proper affordability assessments. An independent auditor to be appointed to identify

all open loans to determine if a proper affordability assessment was granted or whether the loans

were extended recklessly. All such identified loans to be deemed reckless and the Tribunal to set

aside all of the consumers‟ rights and obligations under those agreements; and

16.5 Imposing an administrative fine on the Respondents in the amount which is the greater of R1,

000 000.00 or 10% of the annual turnover of the PCL Trust.

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17. The Applicant also requested, in terms of section 150 (i), any other appropriate order required to

give effect to the consumers‟ rights in terms of the Act.

BACKGROUND

18. The referral has its origins in a complaint initiated by the Applicant in terms of section 136 (2) of the

Act, with the subsequent initiation of an investigation in terms of section 139 (1) (c) into the conduct

of PCL Trust in the consumer credit market.

19. According to the Applicant, the initiation of the aforementioned investigation followed a previous

investigation initiated by the Applicant on the 14th of October 2016 against PCL Trust, which in turn

followed a monitoring exercise conducted between 19 and 21 September 2016.

20. The Applicant alleged that the monitoring exercise conducted during September 2016 found that

PCL Trust granted credit to consumers whilst it had not paid its annual renewal fees for three

subsequent years. The Applicant also contemplated that it obtained information that PCL Trust,

operating at 28 Songozwi street in Louis Trichard, retained SASSA cards, bank cards and Identity

documents.

21. Confusion erupted during the monitoring exercise in September 2016, due to a difference in the

name of the business that was authorized for investigation and the supposed correctly registered

name of the business operating at the said premises. The names PCL and Prestige Cash Loans

were displayed at the premises, while the investigation certificate was issued for Prestige

Konsultante Trust, t/a Prestige Cash Consultants.

22. The Applicant issued a new memorandum initiating the complaint and authorising the investigation

against the Trust (certificate number 3036) for PCL Trust t/a PCL Cash Loans: Louis Trichardt

on 30 November 2016. The Applicant also placed into evidence the Credit Provider Certificate for

the period 09 October 2015 – 09 October 2016; which registration certificate certified that PCL

Trust, with IT 5627/07 and NCRCP registration number 1520, was registered to operate the

branch PCL Cash Loans – Louis Trichard.

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23. Accordingly, on or about the 5th of December 2016, a new investigation was conducted at PCL

Trust‟s place of business situated at 28 Songozwi street, Louis Trichardt. Interviews were

conducted with both the managers of PCL Trust and their assistant. During the investigation 10

(ten) consumer files were randomly selected and assessed. An investigation report was compiled,

outlining various forms of prohibited conduct.

24. The Applicant lodged its main application to the Tribunal on the 28th of March 2018. This

application listed PCL Trust as the Respondent.

25. The Applicant‟s application was accompanied by the Applicant‟s founding affidavit, duly signed by

Jacqueline Peters, the Applicant‟s Manageress in the Investigations and Enforcement Department,

on the 27th of March 2018. This founding affidavit listed all the alleged breaches of the Act by the

Respondent.

26. The first hearing set down for the 3rd of July 2018 could not proceed on a default basis, as the

Respondent had not responded to all the correspondence as served. The Tribunal ordered the

Applicant to also serve the application on the verified physical address of the Respondent no later

than 13 July 2018.

27. The matter was again set down for a hearing on the 21st of September 2018; but was subsequently

removed from the roll on the 20th September 2018 at the behest of the Applicant, and the

Respondent consented to the postponement.

28. The matter was set down for the third time for a hearing on the 26th of November 2018.

29. On the 23rd of November 2018 the Respondent, through its attorneys Barnard Incorporated,

lodged an application for an order, in terms of Rule 34, allowing the trustees the late filing of an

answering affidavit. As part of their motivations for the late filing of their answering affidavit, they

stated:

29.1 They would be opposing the main application on grounds of a “non-joinder, misjoinder and

improper citation”, arguing that the husband (Leon Antonius Du Plessis) and wife (Eulien Du

Plessis), who are trustees, must be cited as the Respondents Nomine Officii; and

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29.2 They also argued that they had been improperly cited on grounds that they are no longer credit

providers, as they had sold those credit providing businesses as going concerns to other

people.

30. The Applicant, in its Rule 15 Application, countered that PCL Trust was a registered credit provider

at the time of the investigation; but was nonetheless readily prepared to amend its papers to cite

the Respondents as argued by the latter. The Tribunal approved the revised citation of the

Respondents to include the nomine officii citation of the First and Second Respondents.

31. The Applicant filed the notice to amend its papers in line with the Rule 15 judgment and provided

proper proof of service via email. The Applicant also amended Form Tl.57 and its Founding

Affidavit accordingly.

32. The notice of set down was issued, and the matter was heard on an opposed basis on 5 March

2020.

33. At the hearing only the two Trustees were present. The Respondents informed the Tribunal that

they were unable to continue paying their attorney and decided to conduct their own defense. They

made various submissions, which essentially can be summarised as a plea for leniency from the

Tribunal. Although the Tribunal heard the oral submissions made, it is required to consider the

pleadings filed by the Respondent‟s attorney on their behalf.

POINTS IN LIMINE

Point in limine 1: Citing and accountability of trustees

Respondent

34. During the hearing of the main matter, the First and Second Respondents appeared eo nomine as

cited in the revised application. As eo nomine Respondents, the First and Second Respondents

brought a new defence, namely that they were not accountable for the prohibited conduct that was

allegedly occurring repeatedly in the name of the Trust.

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Applicant

35. According to the Applicant, the Trust exists as a legal institution with legal capacity, and in this

sense the PCL Trust:

35.1 Was a registered credit provider at the time of the investigation as per the Applicant‟s records;

35.2 Entered into the credit agreements which are the subject matter of this referral to the Tribunal;

35.3 Will (if the Tribunal finds in favour of the Applicant) be found to have committed the

contraventions of the Act and Regulations as alleged; and

35.4 Will (again, if the Tribunal finds in favour of the Applicant) be liable to pay the administrative fine

as per the relief sought by the Applicant.4

Analysis

36. I deal firstly with the law relating to the nature of a Trust and the duties of trustees. It is trite that a

Trust is not a legal person. In its strictly technical sense, the Trust is a legal institution sui generis.

37. As outlined in Braun v Blann and Botha NNO & another:

“The trustee is the owner of the Trust property for purposes of administration of the Trust but qua

trustee he has no beneficial interests therein.”5

38. In Land and Agricultural Bank of South Africa v Parker and others6 Cameron JA elaborated (para

10):

“. . . . [A Trust] is an accumulation of assets and liabilities. These constitute the Trust estate,

which is a separate entity. But though separate, the accumulation of rights and obligations

comprising the Trust estate does not have legal personality. It vests in the trustees, and must be

administered by them ─ and it is only through the trustees, specified as in the Trust instrument,

that the Trust can act . . . .”

4 Par. 9.2 of the replying affidavit

5 See in this regard: Braun v Blann and Botha NNO & another [1984] ZASCA 19; 1984 (2) SA 850 (A) at 859D-H;

Commissioner for Inland Revenue v Friedman & others NNO [1992] ZASCA 190; 1993 (1) SA 353 (A) at 370D-H)

6 Land and Agricultural Bank of South Africa v Parker and others [2004] ZASCA 56; 2005 (2) SA 77

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39. In Lupacchini NO & another v Minister of Safety and Security7 (SCA) Nugent JA took this theme

further and observed that (para 1):

“. . . . A Trust that is established by a Trust deed is not a legal person ─ it is a legal relationship of

a special kind that is described by the authors of Honoré’s South African Law of Trusts as a legal

institution in which a person, the trustee, subject to public supervision, holds or administers

property separately from his or her own, for the benefit of another person or persons or for the

furtherance of a charitable or other purpose.”

40. Where more than one trustee have been specified in the Trust deed, they share a common

fiduciary obligation towards the fulfilment of the objects of the Trust and must act jointly.8Section

9(1) of the Trust Property Control Act No. 57 of 1988 reads as follows:

“9. Care, diligence and skill required of trustee ─

(1) A trustee shall in the performance of his duties and the exercise of his powers act with the care, diligence and skill which can reasonably be expected of a person who manages the affairs of another.”

41. In Sackville West v Nourse & another9, Kotze JA stated the position relating to the fiduciary duties

of trustees as follows (at 534):

“The effect of this authority is that a tutor must invest the property of his ward with diligence and safety. It is also said that a tutor must observe greater care in dealing with his ward’s money than he does with his own, for, while a man may act as he pleases with his own property, he is not at liberty to do so with that of his ward. The standard of care to be observed is accordingly not that which an ordinary man generally observes in the management of his own affairs, but that of the prudent and careful man; or, to use the technical expression of the Roman law, that of the bonus et diligens paterfamilias . . .’

42. The learned judge of appeal continued (at 535):

“We may accordingly conclude that the rule of our law is that a person in a fiduciary position, like a

trustee, is obliged, in dealing with . . . the money of the beneficiary, to observe due care and

diligence, and not to expose it in any way to any business risks.”

7 Lupacchini NO & another v Minister of Safety and Security [2010] ZASCA 108; 2010 (6) SA 457 (SCA)

8 Compare: Hoosen & others v Deedat & others [1999] ZASCA 49; 1999 (4) SA 425 (SCA) paras 23, 24 and 26

9 Sackville West v Nourse & another 1925 AD 516

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43. This principle was elaborated upon by this court in Administrators, Estate Richards v Nichol &

another10 where the following was stated (at 557D-F):

“. . . [T]he standard was higher than that which an ordinary person might generally observe in the

management of his or her own affairs. Such a person, it was pointed out, was free to do what he

liked with his property and not infrequently selected investments which were of a speculative

nature, particularly when the potential profits were high. A person in a fiduciary position such as

a trustee, on the other hand, was obliged to adopt the standard of the prudent and careful

person, that is to say the standard of the bonus et diligens paterfamilias of Roman law, and was

accordingly, as Kotze JA concluded at 535, “obliged, in dealing with and investing the money of

the beneficiary, to observe due care and diligence, and not to expose it in any way to any

business risks”. The need to avoid risks was emphasised in the judgments of both Solomon ACJ

and Kotze JA.”

44. The governance responsibilities of a Trust are summarized as follows by Schoeman:

“The governance of a Trust is completely in the hands of its trustees and all assets, liabilities, rights

and duties of the Trust reside in them. Consequently, an appointment as a trustee is a position

that comes with a substantial amount of responsibility and, therefore, it is an appointment not to be

taken lightly. More specifically, the trustees have a greater standard of care than normal people,

actually similar to that of a director of a company, and can be sued by the Trust beneficiaries if they

do not honour their fiduciary duties or are negligent in any way.”11

45. It follows from the above exposition that the main considerations that are decisive in establishing

the existence, nature and extent of a trustee‟s fiduciary duty, include the following:

45.1 The manner in which he/she conducts the administration of Trust property12;

45.2 The advantage of Trust beneficiaries;13 and

10 Administrators, Estate Richards v Nichol & another [1998] ZASCA 82; 1999 (1) SA 551 (SCA)

11 Arinda Truter | SchoemanLaw Inc 2016. https://www.schoemanlaw.co.za/wp-content/uploads/2016/09/The-General-

Duties-and-Obligations-of-Trustees.pdf

12 Hofer v Kevitt 1996 2 SA 402 (C) 407F; Olivier 2001 SALJ 224 229. See also Lorentz v TEK Corporation Provident Fund

1998 1 SA 192 (W) 221A-B; Welch‟s Estate v Commissioner, South African Revenue Service 2005 4 SA 173 (SCA)

195J-196A

13 Olivier 2001 SALJ 224 229; Ware & Roper “The World of Offshore Sham Trusts” 1999 Insurance and Tax 17 18. See

also Jowell v Bamwell-Jones 1998 1 SA 836 (W) 891B 894E; Bafokeng Tribe v Impala Platinum Ltd 1999 3 SA 517

(BHC) 545J-546A; Nel v Metequity Ltd 2007 3 SA 34 (SCA) 38G

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45.3 Trust administration being conducted with the utmost good faith14 and in the best interests of

the Trust beneficiaries.15

46. In line with the above, the trustees of a Trust are responsible for the proper management and

administration of the Trust. Trustees are responsible for the maintenance of accurate accounting

records that are necessary to fairly represent the Trust‟s state of affairs and to explain its

transactions and financial position on request and as required in law.

47. Unsecured creditors of a trustee do not have a direct claim against the Trust assets, unlike

secured creditors who have a claim through their security. It is the trustee that is personally liable

for debts properly incurred in the administration of the Trust.16 Therefore the primary claim for

creditors is against the trustee personally, not the Trust assets. Creditors may recover from the

trustees directly if the trustees have sufficient assets, other than assets that are held on trust.

However, if a trustee has few or no assets of its own that are available to satisfy the creditor‟s

debts, then the creditor must look to the Trust property through subrogation.17

48. As it is not in dispute that the First and Second Respondents are the trustees of PCL Trust and

that PCL Trust was still registered with the Master at the time of the hearing, these fiduciary

responsibilities pertain to the First and Second Respondents. If a Trust is operating as a credit

provider, the trustees are expected to maintain accurate business records of the Trust. These

records should include any book, record, account or document relating to the administration of the

property. In particular, it includes all activities and records relating to the administration of credit

lending processes by PCL Trust.

Findings

49. It is trite that a trust is not a juristic person and that its assets vest in the trustees in their capacities

as such. Accordingly, the Tribunal correctly joined all trustees in this matter; ensuring that the

14 Doyle v Board of Executors 1999 2 SA 805 (C) 813B. See also Daewoo Heavy Industries (SA) (Pty) Ltd v Banks 2004 2

All SA 530 (C) 533c

15 Olivier 2001 SALJ 224 229. See also Jowell v Bamwell-Jones 1998 1 SA 836 (W) 891B 894E; Bafokeng Tribe v Impala

Platinum Ltd 1999 3 SA 517 (BHC) 545J-546A; Nel v Metequity Ltd 2007 3 SA 34 (SCA) 38G

16 Levin v Ikiua [2010] 1 NZLR 400 (HC) at [120]

17 Ibid

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trustees can protect and enforce the rights of the Trust and also enforce the obligations of the

Trust.

50. The rule 15 amendment sought to give linguistic effect to the legal rule that a Trust lacks legal

personality, by amending the papers to cite the trustees eo nomine. As outlined by Cameron:

“In legal proceedings the trustees must act nomine officii.... It is usual for the trustees to be cited as "A, B

and C" in their capacity as the trustees of the XYZ Trust but cases in which the trust as such is cited are not

unknown.”18

51. The Tribunal noted that the First Respondent was the contact person who applied to the Applicant

for the registration of the PCL Trust as a credit provider, and is also the sole signatory of the

conditions of registration.

52. Consequently, the trustees are before the Tribunal eo nominee and the Tribunal has

acknowledged the Trust as properly before the Tribunal, represented by its trustees. A trust

functions through its appointed trustees and the legal personality thereof requires that all trustees

act together for and on behalf of the Trust.19

53. Concerning the defence that the trustees of the Trust cannot be held liable for the prohibited

conduct of PCL Trust, the First and Second Respondents are displaying serious ignorance of a

trustee‟s duties. The Respondents, as trustees of PCL Trust, will indeed be personally liable for all

liabilities incurred in performing the Trust activities20, including debts to third parties and in all

liabilities resulting from any prohibited conduct towards consumers.

54. Consequently, this point in limine must fail.

Point in limine 2: Trust cannot be de-registered as credit provider because it is no longer so

registered

Respondent

18 See Cameron et al Honores South African Law of Trusts 5th Edition (2002) at 256

19 Steyn and Others NNO v Blockpave (Pty) Ltd 2011 (FB)

20 Also see Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360 (HCA) at 367

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55. According to a trustee resolution dated 17 March 2015, Respondent 1 and 2 decided to sell the

business of PCL Trust at the respective branches of Sibasa and Louis Trichardt to the relevant

managing personnel of the Respondent's branches at Sibasa (Ms Hermari Venter) and Louis

Trichardt (Ms Yvonne Pretorius and Eugene Dunhin) as going concerns. The sale of the business

was conditional to the employees continuing to manage the business in the absence of the

trustees. However, the trustees would continue to receive the profits of the business in an attempt

to settle the purchase price ahead of the actual “transfer date” of the business. The transfer date

was expected to be in November 2018.

56. Due to difficulty for the Respondents to ensure proper management of the business while based in

Pretoria, they resolved to cancel the sale agreements. They advised the NCR on 1 March 2017

that: "We have closed PCL Trust” and “we no longer do business". The annual registration fees to

the NCR were also not paid since.

57. The Respondent subsequently submitted that, even if the Applicant failed to cancel PCL Trust‟s

registration according to the mentioned emails, such registration must have lapsed due to their

failure to pay the annual registration fees.

Applicant

58. The trustees attached their resolution on the sale of the business but failed to provide the sale and

purchase agreement. Accordingly, the Tribunal cannot ascertain the actual terms of such a

contract.

59. The Applicant also denied that the PCL Trust timeously informed it of its closure or revised contact

details.

60. However, in its replying affidavit, the Applicant abandoned its request for cancellation against PCL

Trust, persisting only with the balance of the relief it was seeking against the PCL Trust and its

trustees. The Applicant explained that it acted upon information as received from its Registration

Department. The Registration Department of the Applicant confirmed that they were retaining PCL

Trust in their records as „still registered due to an administrative oversight‟.

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61. The Applicant implored that such oversight does not affect the substance of the Applicant‟s case,

its findings or the prayers it seeks against the Respondent, save for the prayer for cancellation.

Analysis

62. Despite the Applicant‟s abandoning of its plea for cancellation, the de iure cancellation resurfaced

during the hearing of the main matter. The Tribunal finds it essential to provide clarity on the actual

date, nature and reason for deregistration of this credit provider. Accordingly, the Tribunal decided

to deal with the matter.

63. During the hearing, the Respondents consented that they never concluded the actual sale of the

business. Further, the Respondents confirmed that PCL Trust remained registered with the Master

with its registered trustees unchanged, up to and including the date of the hearing. Accordingly, the

Tribunal is satisfied that the trustees did not sell the business of the PCL Trust, as alleged in the

answering affidavit of the trustees.

64. The trustees confessed to abandoning the business of PCL Trust while the First Respondent

focused on his theology studies. This abandoning of the Trust is construed as serious negligence

and a dereliction of their duties as trustees.

65. The Tribunal is convinced of the Respondents‟ poor custodianship during the period that the

alleged contraventions of the Act occurred. These contraventions occurred while the Respondents

were registered trustees.

66. In line with section 52(4) of the Act:

“(4) A registration -

(a) takes effect on the date on which the certificate or duplicate certificate of registration is

issued; and

(b) subject to timely payment of the prescribed registration renewal fees, remains in effect

until-

(i) the registrant is deregistered; or

(ii) the registration is cancelled in terms of this Act.”

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67. Although the initial registration of the PCL Trust as credit provider is common cause, the

deregistration of the PCL Trust could not be proven beyond reasonable doubt at the hearing. The

intention of section 52 (4) (b) is to regulate the authority of the NCR in the registration and

deregistration process, as it pertains to registration requirements, criteria and procedures. The fact

that the registration is then “subject to the timely payment of the prescribed registration renewal

fees”, implies therefore that administrative action by the NCR is required to approve the actual

deregistration in terms of section 52 (4) (b).

68. This interpretation is also apparent from the practice by the NCR to populate and publicly

communicate the names of all former credit providers deregistered in line with section 52 (4) (b).

The appropriate section, as reflected on the official website of the Applicant, was introduced as

follows:

“The following credit providers‟ registration has lapsed in terms of section 52(4)(b) of the National

Credit Amendment Act. The effect of such lapsing is that credit providers should not engage in

previously registered activities and credit agreements concluded are considered unlawful and of no

force and effect.”21

69. The deregistration process following the non-payment of fees, should not be confused with the

cancellation of the registration by the Tribunal. Section 57 outlines the latter process, which

process makes provision for the cancellation of registration by the Tribunal on request of the

National Credit Regulator, if the registrant repeatedly –

(a) fails to comply with any condition of its registration;

(b) fails to meet a commitment contemplated in section 48( 1); or

(c) contravenes this Act.

70. The difference is that, if the Tribunal has cancelled a registration in terms of section 57, the

National Credit Regulator must notify the registrant in writing of –

21 With respect to PCL Trust, trading as “North Centre Sibasa 0970”, the website communication of the NCR reflects a

cancellation date of 31 October 2019. See https://www.ncr.org.za/register_of_registrants/

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(a) the cancellation;

(b) the reasons for the cancellation; and

(c) the date of cancellation.

71. The deregistration process should also not be confused with the voluntary cancellation process as

regulated by section 58; according to which the National Credit Regulator must –

(a) cancel the registration certificate; and

(b) amend the register accordingly.

72. In line with section 57 (7), registration is cancelled as of –

(a) the date on which the Tribunal issues an order, or

(b) in the case of a cancellation in terms of section 58, the date specified by the registrant in the

notice of voluntary cancellation.

Conclusion

73. The NCR is responsible for accurately recording and approving a voluntary deregistration

application (section 58) and any deregistration due to non-payment of fees (section 52 (4) (b) ). In

this matter, the parties did not agree on the reason for the deregistration. The Applicant failed to

provide satisfactory documentary proof to the Tribunal to confirm the reason and date of

deregistration of PCL Trust as credit provider. The Respondents, on the other hand, jumped

between reasons for deregistration. On the one hand, they contemplated that the NCR

deregistered PCL Trust because of non-payment. On the other hand, they submitted that the NCR

deregistered PCL Trust following a request for voluntary deregistration. Irrespective the de iure

situation regarding its registration, it was not in dispute that PCL Trust was de facto in business

and operational at the time of the alleged infringements.

74. Neither the official and documented outcome of the voluntary application for cancellation nor the

deregistration communication letters from the NCR, as required in law, could be provided in

evidence to the Tribunal. Consequently, the Tribunal perceived the PCL Trust as a registered credit

provider with the NCR at the time of the alleged infringements.

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75. Further, the Tribunal took note of the alleged cease of business by the PCL Trust during 2017 and

the failure by PCL Trust to continue payment of its annual registration fees hence. By failing to pay

annual registration fees, a credit provider cannot escape the wrath of the law. A literal interpretation

of section 52 (4) (b) may create the impression that an “automatic cancellation” occurs if a credit

provider does not pay its annual registration fees in line with the Act. This interpretation is incorrect

and displays ignorance of the intention of the legislator.

76. The legislator did not create a loophole to enable a credit provider to stop paying annual

registration fees to get “automatically deregistered”. Automatic deregistration would create the risk

that credit providers escape investigation by the NCR and scrutiny by the Tribunal. The NCR is

responsible for the investigation and brings an application for cancellation of registration to the

Tribunal as necessary. Accordingly, one of the reasons for cancellation of registration by the

Tribunal, is the credit provider‟s failure to comply with any condition of its registration, such as the

paying of annual dues.22

77. It is further essential to highlight the importance of interpreting the cancellation clauses about credit

providers from the point of protecting consumers. The responsibility is foremost to ensure that

consumers are not exposed and negatively affected by any cancellation of registration. The NCR

must inform consumers of the deregistration of all credit providers. Accordingly, the NCR must

provide the credit provider with an official deregistration letter if the latter is deregistered due to its

failure to make annual payments. Similarly, the NCR must document every deregistration and

remove the credit provider from the public database.

78. Therefore, the NCR can confirm a credit provider‟s deregistration in terms of section 52 (4) or 58

after a voluntary application, or the Tribunal can cancel a registration. When alleged prohibited

conduct coincides with the request for registration cancellation, the Tribunal will consider both.

79. Concerning the intention of the legislator, the “purpose” of the Act reads as follows:23

22 See section 57(1)(a) of the Act

23 See section 3 of the Act

18

“ to promote and advance the social and economic welfare of South Africans, promote a fair,

transparent, competitive, sustainable, responsible, efficient, effective and accessible credit market

and industry, and to protect consumers…”

80. The Tribunal also considered section 150 (f), which empowers the Tribunal to confirm an order

against any unregistered person to cease engaging in any activity that must be registered in terms

of the Act. Accordingly, the Tribunal is convinced that the parties intended to cancel the registered

status of PCL Trust and both attempted to do so. However, as these attempts by the parties did not

follow due process in line with the Act, the Tribunal finds any deregistration assumptions by the

Respondent and any concessions or confirmations to that effect by the Applicant, as null and void.

81. Consequently, the Tribunal is convinced that it is in the interest of justice to provide clarity and

confirm the date and reasons for cancellation of registration of PCL Trust with the Applicant.

Therefore, to give effect to consumers‟ rights, the Tribunal decided to rule on this matter in terms of

section 150(i). Accordingly, this point in limine must fail.

CONTRAVENTIONS OF THE ACT

Introduction

82. The Applicant asserts that the Respondent has failed to operate its business in a manner which is

consistent with the purpose and requirements of the Act.

83. According to the Applicant, the conduct exhibited by PCL Trust constitutes critical contraventions in

terms of the Act which occurred repeatedly as appears from the investigation report and which are

detailed hereunder.

84. The Tribunal proceeds to consider the contraventions that are alleged in the investigation report

and the complainant‟ affidavit.

Transgression 1: Failure to adhere to conditions of registration

(i) Trading name and advertising practice

(ii) Registration Certificate

19

The Act

85. Section 52(5) of the Act determines that:

“ A registrant must-

(a) post the certificate or duplicate registration certificate in any premises at or from which it

conducts its registered activities;

(b) reflect its registered status and registration number, in a legible typeface, on all its credit

agreements and communications with a consumer..”.

Relevant conditions to be highlighted include:

A. General Conditions.

….

5. The registrant must display a registration certificate at a business premises at or from which

the registrant conducts registered activities, and must prominently display a window decal

supplied by the National Credit Regulator at the entrance to each such business

premises…

6. Any significant change in shareholding, ownership, company structure or control of the

registrant, or acquisitions and mergers, must be reported to the National Credit Regulator if

such changes or events impact upon the criteria for registration as a credit provider, as per

section 40 of the Act.

7. The registrant must further notify the National Credit Regulator of any material change in

the information provided at the time of the registration, where such change is significant to

the registrant’s ability to conduct the business of a credit provider, or ability to comply with

the Act or regulations…”24

Applicant

24 See conditions of registration of the Third Respondent (PCL Trust) on page 305 of the Tribunal Bundle

20

86. The Applicant submitted that the conditions of the registration of the Trust were not adhered to,

as the registration certificate of the Trust was not properly displayed at the premises at which it

conducted its registered activities.

87. The Applicant also submitted that the registered status and registration number was not

reflected on all the credit agreements and communications with consumers.

88. The Senior Inspector in the Investigations and Enforcement Department of the NCR, Ms L

Odendaal, confirmed that the receipts provided after payment of the prescribed fee and

completion of the “Loan Application & Agreement” form in use by the NCR during the 5

December 2016 investigation, referred to “Prestige Cash Loans”, with registered NCR number

NCRCP 152025 and did not refer to PCL.

Respondent

89. The first Respondent attempted to clarify the matter in stating that: “I admit that the third

Applicant traded under the name of prestige Cash Loans. Indeed, its registered name, “PCL”, is

simply an abbreviation of Prestige Cash Loans.”26

90. The First Respondent also outlined that the required NCR Application Forms as submitted to the

NCR stipulated the Trust‟s name as “PCL TRUST (IT5726/07 TRADING AS PRESTIGE CASH

LOANS).”27 According to the first Respondent, “Prestige Cash Loans” and “PCL” were used

simultaneously and interchangeably.

91. As outlined by the First Respondent, it is the case of the Trust that the simultaneous and

interchangeable use of “Prestige Cash Loans” and “PCL” does not constitute a “change in the

information provided” as envisaged by condition 7.

25 See page 343 of the Tribunal bundle

26 See page 259 of the Tribunal bundle, paragraph 38 of the answering affidavit

27 See page 259 of the Tribunal bundle, paragraph 39 of the answering affidavit

21

92. It also contended that, even if it does, “…it was never such a significant change to the

registrant’s ability to conduct the business of a credit provider or ability to comply with the Act or

regulations” as envisaged by condition 7 ”28.

Analysis

93. The correct registered name of the Trust seems to have been communicated to the NCR initially

as “PCL Trust, trading as Prestige Cash Loans”, with NCR application number 4689.29 This

application was lodged in 2007 while the Respondents were domiciled in Sibasa. Consequently,

the NCRCP Registration certificate dated 9 October 2007 reflects PCL - Sibasa in the category

provided for “branch”, with NCR registration number NCRCP 1520. However, the approved

name of the Sibasa branch changed over time. The NCRCP certificate for the Sibasa branch for

the period 09 October 2015 – 09 October 2016, reflects Leopard Cash Loans –

Thohoyandou, Sibasa. The registration number of NCRCP 1520 remained the same

throughout.30

94. However, due to irregularities at the Sibasa branch, as well as failure to pay registration fees for

three years, the PCL Trust, operating at the Sibasa branch, was forced to close its Sibasa

office.31 The closing of the Sibasa branch was not placed in dispute. However, the parties did

not agree on the reasons for such closure. The First Respondent volunteered that both the

Sibasa and Louis Trichardt branches were closed:

“[Due] to ongoing headaches with the businesses and difficulty for me to ensure proper

management thereof whilst based in Pretoria, we resolved to cancel the sale agreements and

close the businesses in January 2016 (with respect to the Sibasa branch) and on 01 March

2017 (with respect to the Louis Trichardt branch).”32

28 See page 261 of the Tribunal bundle, paragraph 43 of the answering affidavit

29 See page 308 of the Tribunal bundle

30 See pages 199 and 39 of the Tribunal bundle for the NCR Credit Provider Certificates for the Sibasa branch

31 See page 335 of the Tribunal bundle, paragraph 6.5.15 of Ms Odendaal‟s investigation report

32 See page 258, paragraph 34.7 of the answering affidavit

22

95. According to the parties, the “Sibasa branch” of the PCL Trust was indeed closed and

deregistered at the time of the investigation at the “Trichardt Branch” (5 December 2017).33 The

point in dispute is whether the “Trichardt Branch” was also closed and assumed deregistered on

5 December 2017.

96. In line with the evidence placed before the Tribunal, the NCR Credit Provider Certificate issued

for Louis Trichardt, is for the period 09 October 2015 – 09 October 2016. The certificate is in the

name of PCL Trust, with NCRCP 1520, trading as PCL Cash Loans – Louis Trichardt. The IT

5627/07 number is also reflected on the certificate.34

97. The Tribunal confirms that deregistration does not enable a credit provider to open or continue

with another office or branch automatically. Deregistration impacts on all branches or offices

of a credit provider, as it is the credit provider that is deregistered, and not the branch/office.

Accordingly, if the NCR deregistered the PCL Trust after the closure of the Sibasa branch/office,

the implication is that the NCR also deregistered PCL Trust for purposes of doing business at its

Trichardt (or any other) branch.

98. In the matter at hand, it seems as if the parties confused the “closing of an office” with the

“deregistration of a credit provider” and equated the two concepts. Accordingly, both parties

seemed to have accepted that, although the Sibasa branch was closed and “deregistered”, the

Louis Trichardt branch was still operational and assumed to be lawfully registered. This was

indeed the de facto situation, as outlined above. The PCL Trust, therefore, justified its

operations in Louis Trichardt by referring to its NCRCP certificate as approved for 9 October

2015 – 9 October 2016, which certificate confirms that PCL Trust was certified under NCR

registration number NCRCP 1520 to operate as PCL Cash Loans – Louis Trichard for the

period until 9 October 2016, as outlined above. It needs to be noted that no certificate was put

in evidence to prove the certification of PCL Trust for operations post 9 October 2016.

Accordingly, the only deduction possible was that the NCR did not issue an NCRCP certificate

for the period within which the NCR executed the investigation, namely on or about 5

December 2016, presumably due to the non-payment of fees.

33 Also see page 198 of the Tribunal bundle, containing the termination of lease letter for the Sibasa premises, dated 3

February 2019, confirming that business seized 2 February 2016

34 See page 24 of the Tribunal bundle for the NCR Credit Provider Certificate

23

99. Further, the Tribunal wishes to comment that the deregistration of a credit provider, when based

on alleged unlawful activities, can only occur through an application to the Tribunal and a

subsequent cancellation ruling by the Tribunal. The issuing of compliance notices to a branch

due to irregularities, on the other hand, is part of the legislative functions and authority of the

NCR and does not equate to deregistration of the Credit Provider.

100. In addition to the failure to provide any evidence of lawful deregistration, no evidence was

placed before the Tribunal to confirm that PCL Trust applied afresh for approval as credit

provider at any point. The only communication put before the Tribunal relevant to this matter, is

the email referred to by PCL Trust to the NCR on 23 June 2017, stating that the Trichardt

Branch was not in operation after 1 March 2017, and the email of 23 June 2017 to the NCR,

confirming that PCL Trust was no longer in business. 35

101. However, the Tribunal finds the notices to the NCR during 2017 irrelevant for purposes of

establishing a reason why the Respondents should not be accountable for the operational

deficiencies as found to exist during the NCR investigation on or around 5 December 2016, the

previous year.

102. The Tribunal also finds it suspect that the Respondents did not dispute the loan activities that

the Branch carried out in the name of the Trust on the day of the investigation of 5 December

2016. The defences put before the Tribunal include various motivations of why the name in use

at the office in Trichardt was indeed correct. The trustees also emphatically defended the

alternating use of PCL and Prestige Cash Loans by the Trichardt Branch.

103. On the other hand, the Respondents took a strong stance that, irrespective any unlawful

activities by the Trichardt branch, the registration of PCL Trust as credit provider cannot now be

cancelled retrospectively. The Respondents contemplated that it requested voluntary

deregistration in 2017 and did not pay any registration fees to the NCR since 2017. During the

hearing, the trustees created the impression that they are justifying the alleged unlawful conduct

as discovered at the Trichardt Office on 5 December 2017 on the one hand. On the other hand,

35 See page 258 of the Tribunal Bundle, paragraph 34.8 of the Answering Affidavit

24

they motivated that the business is no more registered, was allegedly “sold” during the time of

the incidents and that the PCL Trust has finally seized all activities voluntarily.

104. Further, the Senior Investigator commented in her investigation report, that the Manager at the

Trichardt Office could not answer all her questions, at which point the PCL Manager called the

First Respondent to request guidance:

“I enquired on the loan agreement provided to consumers as the consumer signs the pre-

agreement and quotation but is not provided a loan agreement to sign instead consumers sign

Annexure “A”. I pointed out that this document is still in the name of Prestige Cash Loans yet

the credit provider is PCL Trust Louis Trichardt. Pretorius phoned the owner of the business

Mr du Plessis regarding this and Pretorius said Du Plessis indicated they will sort it

out.”36

105. The Respondents did not put it in dispute that Managers and staff working at the Trichardt

Office were in their employ at the time, or that they advised the team on how to operate and

conduct the business.

106. Accordingly, the Tribunal finds that the trustees were well informed of the carrying on of

business in the name of the Trust at the Trichardt Office on 5 December 2017. The trustees

were informed of the loan processes being conducted at the Trichardt Office and also about the

outside notice board of the business, which reflected: “Prestige Cash Loans” and “PCL”.37 The

contact number of the business was also hugely written on the outside notice board as 015 516

4935, unmistakably different from the contact number reflected on agreements with consumers

(015 516 0077)38 and different from the contact number officially communicated to the NCR.

107. The Tribunal is further convinced that the investigation in September and October 2016 was

sparked by suspicions that the PCL Trust (formerly operating in Sibasa) was continuing to do

36 See page 334 of the Tribunal bundle, paragraph 6.5.11 of the Investigation Report of the Senior Investigator

37 See page 38 of the Tribunal Bundle, which contains a photo of the outside view of the business in Louis Trichardt Street.

38 See an example of an agreement on page 389.

25

business (albeit at another location) after it was closed by the NCR39 and without any proper

certificate. As outlined above, the PCL Trust‟s NCRCP certificate for the office in Louis Trichardt

terminated 9 October 2016.

108. It was also then that the NCR discovered the second NCRCP registration (NCRCP 3061) for

“Prestige Konsultante Trust” t/a “Prestige Cash Consultants”. According to the records of the

NCR, this business was lawfully registered for operation as credit provider then, at the same

location in Louis Trichardt as the location from which PCL Trust operated. Based on information

received regarding unlawful activities, the NCR approved an investigation in October 2016 in

respect of “Prestige Konsultante Trust”, registered at the NCR to operate at the same location as

PCL Trust.

109. It is only on arrival at the location in Songozwa street that the incumbents at the location told the

NCR that the credit provider on site was “PCL Trust” and not “Prestige Cash Consultants”. The

NCR could also not find any signage or NCRCP certificate relating to “Prestige Cash

Consultants” or “Prestige Konsultante Trust” on site. The trustees vehemently denied any

knowledge of this business, how it got registered or that it was operating at the same premises in

Louis Trichardt as PCL Trust.

110. Understandably, confusion about the name existed at the time, and it is unacceptable that the

NCR cannot explain the registration of a different credit provider with a different NCRCP number

with a blatantly confusing name at the same location.

111. The Tribunal noted with concern the existence of what seemed to have been a second credit

provider that was domiciled at the same location as the Trust, referred to as “Prestige Cash

Consultants” or “Prestige Konsultante Trust” with NCRCP number 3061.

112. The use of the full name of the Trust, namely “Prestige Cash Loans”, confused the NCR in that it

was very close to the other credit provider registered for the same location, namely “Prestige

Cash Consultants”. Only the last word in the name was different („Consultants‟ instead of

“Loans”). Confusion by consumers can also be assumed.

39 See Annexure FA8 to the Founding Affidavit of Jacqueline Peters, containing the deregistration letter of the branch

situated at Sibasa.

26

113. Although the trustees provided evidence that they advised the NCR as far back as 2007 of the

full trading name of the Trust (namely “Prestige Cash Loans”), this “full” name of PCL was not

contained on any NCRCP certificate provided in evidence to the Tribunal. When asked why the

“full” name of “Prestige Cash Loans” was placed on the exterior notice board and the entrance of

the branch in Louis Trichardt, the trustees explained that it was their practice to use the full name

of “Prestige Cash Loans” interchangeable with PCL. However, they denied ever using the name

“Prestige Cash Consultants”.

114. According to the official, public records of the NCR, the credit provider registered as “Prestige

Konsultante Trust”, was also trading as “Bent Store Giyani 0826”, with contact number 015 851

1281 and was deregistered only on 3 March 2018.

115. To add to this confusion, a different branch of the PCL Trust, namely North Centre Sibasa 0970,

was also still operating under NCR registration number NCRCP1520 at the time and only

deregistered on 31 October 2019.40 What is evident from the official public records of the NCR, is

that the email address of the latter credit provider is recorded as jalien@worldonline.co.za.41 This

is of particular relevance in that the First Respondent confirmed unequivocally that his email

address is jalien@worldonline.co.za.42 By confirming his email as jalien@worldonline.co.za, the

Tribunal believes that the registration of “PCL Trust: North Centre Sibasa” was probably linked to

the First Respondent‟s email. The Tribunal is also advised of the registration of “Prestige Cash

Loan (Pty) Ltd”, with NCRCP 8057, registered on 2016/06/02 in Nelspruit. The latter is still

registered with the NCR.

116. The Tribunal is left with the impression that various entities with the same or similar name to that

of PCL Trust (trading as Prestige Cash Loans) had been registered with the NCR. Further, the

Tribunal is convinced that PCL Trust is in the business of opening various branches at irregular

intervals and in multiple places, the detail and magnitude of which could not be established by

40 See page 11 of the Applicant‟s replying affidavit, paragraph 19.2 and 19.3, as contained on page 796 of the Tribunal

bundle. The NCR website [https://www.ncr.org.za/register_of_registrants/lapsed_cp.php?page=98] lists Credit Providers

whose registration has lapsed in terms of section 52(4)(b) of the National Credit Amendment Act. The effect of such

lapsing is that credit providers should not engage in previously registered activities and credit agreements concluded are

considered unlawful and of no force and effect.

41 Ibid

42 See page 272 of the Tribunal bundle, paragraph 85 of the answering affidavit

27

the Tribunal. PCL Trust further believes that it is at liberty to continue to open or continue with

other branches, despite being deregistered by the NCR, and that failure to pay annual fees will

be an easy way to get deregistered and escape investigation by the NCR or the Tribunal. It is

further disconcerting that the records of the NCR and administrative control mechanisms do not

seem to pick up that a credit provider has closed shop and then opened-up shop elsewhere.

117. It also seems as if the NCR considers a new application without double-checking whether the

person applying for registration as credit provider is involved in a pending or completed

deregistration process. The NCR should implement stricter measures to ensure that persons are

not “double-dipping” and so obtain more than one registration number as credit provider,

eventually continuing with one business if the NCR would shut down the other.

118. Also, stricter controls should be considered to ensure that the NCR prevents deregistered credit

providers from being easily registered again under a different trading name, without an

interrogation of the reasons for its deregistration or its capacity to start operations again.

119. Consequently, the Tribunal is satisfied that the Respondent has contravened section 52(5) and

General Conditions 5-8 of the Conditions of Registration.

Findings: Trading name and advertising practice

120. The Tribunal is satisfied that the name “Prestige Cash Loans” is clear from a pamphlet

advertising the business of the entity, an advertising board on the outside of PCL Trust's

business premises and the expressed acknowledgement of said name upon the answering of

telephone calls as evidenced by Odendaal during the investigation.

121. The fact mentioned above is further clarified with reference to the photographs attached to the

memorandum marked as Annexure "FA4" of the founding affidavit of the Applicant, as amended.

It is also apparent with reference to the receipts signed by Consumers as proof of the extended

loans attached to the investigator‟s report marked as Annexure "A".

122. As per the registration information provided to the Applicant, the trading name for purposes of its

registration with the NCR, is PCL Trust, Louis Trichardt and said details were not updated with

the current status.

28

123. PCL Trust accordingly failed to inform the Applicant of the information mentioned above which

information materially differs from the information provided to the Applicant by the First, Second

and Third Respondents.

124. Accordingly, the Tribunal finds that the aforementioned trading name is not just misleading but

causes confusion as to which registrant one is dealing with as it had in this instance.

125. By advertising the availability of credit under the name and style of Prestige Cash Loans when

the said name is not reflected on the NCRCP certificate, PCL Trust contravened section 76 of

the Act in that the advertisement is misleading and deceptive.

126. As a result of the aforementioned, the Tribunal finds that PCL Trust contravened General

Condition 7 of its Conditions of Registration read with section 52 (5) (c) of the Act.

Findings: Registration Certificate

127. The Tribunal finds that the PCL Trust displayed the registration certificate of the wrong branch at

its business premises in Louis Trichardt.

128. As per the information and evidence attached to the memorandum marked as Annexure FA4 of

the Applicant‟s founding affidavit, as amended, it is clear that PCL Trust displayed a certificate

for PCL Trust situated in Sibasa at its premises, which branch was closed at the time of the

investigation.

129. The Tribunal finds that PCL Trust, therefore, with the knowledge of its voluntary deregistration

status, displayed the incorrect registration certificate at the business premises of PCL Trust

situated in Louis Trichardt. This is not only misleading and deceptive; but causes confusion to

anybody that enters the business premises of PCL Trust. The Tribunal is further convinced by

the written and oral evidence put before it, that the correct certificate could not be produced upon

request.

130. The Tribunal, therefore, finds that PCL Trust contravened section 52 (5) (b) and section 52 (5) (c)

read with General Condition 5 of its Conditions of Registration.

29

Contravention 2: Reckless credit and the prevention of reckless credit

The Act

131. Section 80 deals with reckless credit. Section 80 (1) provides that a credit agreement is reckless

if, at the time, the new agreement is made:

(a) the credit provider failed to conduct an assessment as required by section 81 (2),

irrespective of what the outcome of such an assessment might have concluded at the time;

or

(b) the credit provider having conducted the assessment as required by section 81 (2), entered

into the credit agreement despite the available information having indicated that:

(i) the consumer did not understand or appreciate the consumer‟s risks, costs or

obligations under the credit agreement; or

(ii) entering into the credit agreement would make the consumer over-indebted.

132. Section 81 deals with the prevention of reckless credit. Section 81 (2) (a) provides that a credit

provider must not enter into a credit agreement without first taking reasonable steps to assess

the proposed consumer‟s:

a) general understanding and appreciation of the risks and costs of the proposed credit, and of

the rights and obligations of a consumer under a credit agreement;

b) debt repayment history as a consumer under credit agreements; and

c) existing financial means, prospects and obligations (in relation to the credit to be granted).

133. Regulation 23A deals with the criteria to conduct an affordability assessment. Regulation 23A (8)

deals with the consumer‟s existing financial obligations. It provides that a credit provider must

calculate the existing financial means, prospects and obligations as envisaged in section 78 (3)

and section 81 (2) (a) (iii).

134. Regulation 23A further provides for a minimum expense norms table which requires credit

providers to ascertain gross income, statutory deductions and minimum living expenses to be

30

deducted to arrive at a net income, which must be allocated for payment of debt instalments.

Regulation 23A requires the Respondent explicitly to take into account the consumer‟s debt

repayment history as a consumer under credit agreements, as envisaged in section 81 (2) (a)

and stipulates that this requirement must be performed within seven business days immediately

prior to the initial approval of credit.

135. Section 82 (1) provides that a credit provider may determine the mechanisms, models and

procedures to be used in meeting its assessment obligations under section 81, provided that the

mechanism, model or procedure results in a fair and objective assessment.

136. Section 81 (3) precludes a credit provider from entering into a reckless credit agreement.43

137. Section 170 places obligations on credit providers concerning record keeping and provides as

follows:

“A credit provider must maintain records of all applications for credit, credit agreements and

credit accounts in the prescribed manner and form and for the prescribed time”.

138. Regulation 55 (1) (b) (vi) provides that credit providers must keep records which demonstrate

that they have complied with section 81 (2).

Applicant

139. Ms Schwartz submitted that PCL Trust contravened section 80 (1) because PCL Trust concluded

the agreements without conducting an assessment in accordance with regulation 23A to

determine whether the consumers could afford to service their debts under the agreements. As

it appears from the investigation report, no evidence could indeed be found from the sample of

consumer files obtained from PCL Trust that it had obtained credit bureau reports to determine

the consumers‟ ability to repay the loans. As a result, PCL Trust failed to assess the debt

repayment history of consumers under credit agreements and failed to ascertain statutory

deductions.

43 See also National Credit Regulator v Standard Bank of South Africa Limited (NCT/29041/2015/140(1) NCA) (2017)

ZANCT 118 at paragraph 78

31

140. Further, the procedures that PCL Trust applied to assess affordability did not result in a fair and

objective assessment under section 82 (1), because PCL Trust stated that the consumers had

no debts “at the time of” granting the applications for credit, which was not the „‟true state of

affairs‟‟.

141. The Applicant raised questions as to the expenses provided by the consumers and PCL Trust‟s

acceptance of same. The Applicant provided evidence of various instances where consumers

listed “no expenses” or where consumers failed to give reasons for minimal expenses.

142. The Applicant also provided evidence of documented debits listed on the consumers‟ SASSA

printouts, while PCL Trust neglected to include same during its affordability assessment. In this

regard, the Applicant outlined that should the debits as reflected on the SASSA printouts have

been included, many consumers would have been over-indebted and not have been able to

afford the extended loan.

Respondents

143. According to the Respondents, PCL Trust‟s managers were under an obligation to conduct credit

bureau enquiries and to obtain such statements. The Respondents could not explain the reason

for such failure, other than that the managers were remiss.

144. The Respondents outlined that the consumers' SASSA receipts were always obtained, checked

and copies thereof made. The Respondents, therefore, submitted that the consumers' repayment

history relating to any and all debts advanced by registered credit providers would reflect thereon

and were assessed accordingly.

145. The Respondents pointed out to the Tribunal during the hearing that the consumers, most of

whom were recipients of SASSA grants, had no statutory deductions. Accordingly, where no

expenses were listed on consumers' affordability assessments, the Respondents submitted the

reasons were “because there were none”. The Respondents argued that most of the SASSA

grant holders were living with children, spouses or siblings, who paid all their living expenses.

Accordingly, where debits were reflected on consumers' SASSA receipts but not included in their

32

affordability assessments, the Respondents claimed that it was because all such debits were 30-

day loans and, therefore, not applicable.

Analysis

146. As outlined above, section 81 (3) precludes a credit provider from entering into a reckless credit

agreement. Section 81 (2) imposes an obligation on the credit provider to conduct an affordability

assessment to determine whether the credit to be granted would be reckless.44 When conducting

the affordability assessment, the credit provider must take reasonable steps to assess the

proposed consumer‟s appreciation of the risks and costs of the proposed credit, and the

consumer‟s rights and obligations under a credit agreement. The credit provider must also

assess the consumer‟s existing financial means, prospects and obligations concerning the credit

to be granted. Section 81 (2) is read together with regulation 23A. Regulation 23A (8) requires

the credit provider to calculate the existing financial means, prospects and obligations when

conducting the affordability assessment.

147. The affordability assessment must, therefore, determine whether the consumer will be able to

afford the proposed credit and not make the consumer over-indebted.

148. In the Tribunal‟s view, as is evidenced in all the sampled files and more specifically as expressed

by the Manager of the Trust, PCL Trust failed to conduct a credit bureau enquiry or obtain a

credit bureau statement.

149. The next question is in terms of section 80 (1) (a): “Did the credit provider first conduct an

assessment as required by section 81 (2), irrespective of what the outcome of the assessment

might have concluded at the time?”

150. Although a credit provider may under section 82 (1) determine the mechanisms, models and

procedures under section 81, these must result in a fair and objective agreement. In the

Tribunal‟s view, the Respondent did not assess affordability fairly and objectively, because the

Respondent did not obtain any credit bureau records.

44 Standard Bank, Ibid at paragraph 78.2 and National Credit Regulator v Mobimoola Financial Services (Pty) Ltd

NCT/18256/2014/140 at paragraph 53

33

151. The Tribunal is convinced that the Respondent also granted credit to the consumers without

conducting affordability assessments in accordance with the regulations. Regulation 23A (8)

obliges the Respondent to calculate the consumer‟s existing financial means, prospects and

obligations as envisaged in terms of section 78 (3) and 81 (2) (a) (iii). When calculating the

consumer‟s existing financial obligations, the regulations compel the Respondent to utilise the

minimum expense norms table contained in the regulations.

152. The regulations oblige the Respondent to follow the methodology when using the table. This

includes assessing the consumer‟s gross income as well as statutory deductions and minimum

living and other expenses to calculate the discretionary income for the consumer to satisfy new

debt.

153. The consumer‟s monthly debt repayment obligations in terms of credit agreements that a

registered credit bureau may reflect on the consumer‟s credit profile are included in this

calculation.45 The Tribunal is not convinced that the PCL Trust followed the prescribed

methodology.

Findings

154. As a result of its failure to conduct a credit bureau enquiry or obtain a credit bureau statement,

the Respondents failed to assess the debt repayment history of consumers under credit

agreements. It also failed to ascertain statutory deductions and assumed that the consumers had

none because many consumers were SASSA grant holders of Child Support Grants and Old Age

Grants. The Respondents accordingly contravened section 81 (2) (a) (ii) read with Regulation

23A and 23A 13 of the Act.

155. The Tribunal found that the Respondents were not able to provide adequate explanations to

questions raised as to the expenses provided by the Consumers, as evidenced in Annexure "Bl"

to "Bl0" of the Applicant‟s founding affidavit. As evidenced in Annexures "82", "83", "85", "86",

"87" and "B10", zero expenses were listed or completed by the consumer without any reasons

for same.

45 Regulation 23A (10) read with regulation 23A (12)

34

156. Further, in for example Annexures "87", "B8", "89" and "B10", there are clear debits listed on the

Consumers' SASSA printouts; however, PCL Trust neglected to include same during its

affordability assessment.

157. As evidenced per Annexure "B7", "B8" and "B10" for example, the Tribunal finds that, should the

debits reflected on the SASSA printouts have been included, the consumer would have been

over-indebted and not have been able to afford the extended loan.

158. By extending credit, where the preponderance of information available indicated that entering

into the credit agreement would make the consumer over-indebted, the Respondents

contravened section 81 (3) read with section 80 (1) (b) (ii) of the Act.

159. Consequently, the Tribunal is satisfied that PCL Trust does not properly assess the Consumers'

financial means, prospects or debt obligations. As a result, the Tribunal finds that PCL Trust

contravened section 81 (2) (a) (iii) read with Regulation 23A of the Act.

160. The Tribunal is further convinced that, as a result of not conducting proper affordability

assessments, PCL Trust entered into reckless credit agreements in contravention of section 81

(3) read with section 80 (1) (a) of the Act.

161. The Tribunal is also not convinced that PCL Trust followed the prescribed methodology as

required when using the minimum expense norms table contained in the regulations, as outlined

above. Consequently, the Tribunal is satisfied that the Respondent contravened section 80 (1)

(a) because the Respondent failed to conduct an assessment as required in section 81 (2).

Contravention 3: Supplementary Agreements

The Act

162. Section 91 deals with the prohibition of unlawful provisions in credit agreements and

supplementary agreements. Section 91 (b) of the Act determines that a credit provider must not

request or demand a consumer to –

35

(i) give the credit provider temporary or permanent possession of an instrument referred to

in section 90 (2) (l) (i) other than for the purpose of identification, or to make a copy of the

instrument;

(ii) reveal any personal identification code or number contemplated in section 90 (2) (l) (ii); or

(iii) direct, or knowingly permit, any other person to do anything referred to in this section on

behalf or for the benefit of the credit provider.

163. Section 90 (2) (l) (i) of the Act determines that a provision of a credit agreement is unlawful if it

expresses an agreement by the consumer to deposit with the credit provider, or with any other

person at the direction of the credit provider, an identity document, credit or debit card, bank

account or automatic teller machine access card, or any similar identifying document or device;

The Applicant’s submission

164. According to the Applicant, PCL Trust required or induced the consumers to sign a document

titled “Mandate and Power of Attorney”, which document contained a provision that would be

unlawful if it were included in a credit agreement. In the aforementioned document, consumers

mandated PCL Trust to keep their cards.

The Respondent’s submission

165. The Respondents contemplated that PCL Trust never retained customer cards. It submitted that

the reason why the Respondent‟s consumers signed the Mandate and Power of Attorney is that

such document formed part of the bundle of documents processed on the Delfin system, but

that it had no practical or nefarious purpose or effect.

166. The Respondent submitted that the Nupay system (of automatically paying the Trust from

customers‟ SASSA cards) was sufficient to ensure payment from SASSA grant holders and that

it was therefore not necessary for the Trust to retain the cards or obtain any other security from

consumers.

Analysis and findings

36

167. The Tribunal is convinced that PCL Trust requires or induces the consumers to sign a document

titled 'Mandate and Power of Attorney', which document contains a provision that would be

unlawful if it were included in a credit agreement.

168. The Tribunal is convinced that consumers mandate PCL Trust to keep their cards, as evident

from Annexures "B1" to "B10" of the investigation report.

169. Consequently, the Respondents contravened section 91 (2) read with section 90 (2) (l) (i) of the

Act.

Contravention 3: Pre-agreement statement and quotation

The Act

170. Section 92 (1) and regulation 28 preclude a credit provider from entering into a credit agreement

with a consumer without first giving a consumer a pre-agreement statement and quotation in the

prescribed form. The prescribed form is form 20.

171. Section 93 (2) and regulation 30 requires a small credit agreement to be in the prescribed form.

The prescribed form is form 20.2.

172. Both forms 20 and 20.2 must contain the respondent‟s full name and NCR registration number.

Applicant

173. According to the Applicant, the Respondent failed to provide consumers with pre-agreement

statements and quotations which comply with the Format set out in Form 20, in that the

following information was omitted:

(i) The NCR number of the Respondent; and the

(ii) Contact number of the Respondent.

174. By omitting the aforementioned information, the Applicant submitted that the trustee

contravened section 92 (1) read with Regulation 28 (1) (b) and Form 20 of the Act.

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Respondent

175. According to the Respondents, the process followed by PCL Trust in concluding credit

agreements can be explained as follows:

(i) A prospective consumer would visit the Trust‟s premises and complete an application

form;

(ii) The Trust would make copies of the prospective consumer‟s identity document as well

as his/her SASSA receipt and SASSA card;

(iii) The Trust would then provide the prospective consumer with a document entitled

“LOAN APPLICATION & AGREEMENT”, to consider and to sign if acceptable;

(iv) If those terms were accepted and signed by the prospective consumer, the Trust would

import the prospective consumer‟s information as per the application form into the

Delfin system, to generate a “QUOTATION AND LOAN AGREEMENT”;

(v) The Trust would thoroughly explain the content of that quotation to the prospective

consumer and afford him/her to go and consider it at his/her leisure;

(vi)

(vii) After consideration, the Trust would then swipe the consumer‟s SASSA card through

the Nupay system, which would record the amount that would be deducted from the

card and paid to the Trust after 30 days;

(viii) A receipt would accordingly be printed and handed to the consumer with the case

amount loaned and the consumer‟s documentation; and

(ix) At the end of the 30 days, the amount due to the Trust less Nupay‟s fee would

automatically be deducted from the consumer‟s SASSA card and paid into the Trust‟s

account.

176. According to the Respondents, the failure to reflect the NCR number on the quotation must

have been a “glitch” on the Delfin system, which went unnoticed by PCL Trust‟s staff members.

However, according to the Respondents, the “Mandate and Power of Attorney” document as

signed by consumers included the Trust‟s NCR number.

Analysis

38

177. The Tribunal has held that the Applicant provided adequate evidence that neither the “Loan

Application & Agreement” form nor the “Quotation and Loan Agreement” adhered to all the

requirements of the Act, the regulations and the prescribed conditions.

178. The “Loan Application & Agreement” has been confirmed as the form that the consumer

considers and signs when consulting first with the Trust.

179. Non-compliance relating to consumer Nkomi Rasethlapa, as an example of a consumer who

receives a child grant, can be summarized as follows:

(i) contains the name of the credit provider, namely “PCL Trust”; and

(ii) contains the IT 5627 number (registration with the Master); and

(iii) does not include the NCR registration number of the Trust; and

(iv) does include the following number: “NLR Registration Number of Accredited

Lender: 946”

(v) details the address as 28 Trichardt street (which seems to be the former name of the

present street, namely „Songozwi Street‟);

(vi) details the telephone number as 015-516 0077 (which is also different from the

officially confirmed contact number of the credit provider, as registered with the NCR,

namely 015-963 2209).46

180. The Respondents could not explain “NLR Registration Number of Accredited Lender: 946”, as

reflected on the “Loan Application and Agreement” form, save to confirm that the registered

NCR number was not reflected on the form and further that the Third Respondent‟s registered IT

number and name were indeed used on the form.

As an example, the “Quotation and Loan agreement” form of the consumer Nkomi Rasethlapa

is summarized as follows:

(i) It reflected the name of the credit provider as PCL: Louis Trichard (the lender);

46 See page 395 of the Tribunal bundle for the Loan Application and Agreement as signed by consumer Nkomi Rasethlapa

and the acceptance letter of the conditions of service by the First Respondent on behalf of the Trust on page 308 of the

Tribunal bundle

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(ii) It did not reflect the IT Registration Number;

(iii) It did not reflect the NCR Registration Number;

(iv) It reflected the address as 28 Songozwi Str Louis Trichard;

(v) It did not reflect any telephone, fax or email address; and

(vi) It included Credit Life Insurance to the amount of R180, which amount was added to the

loan amount.

181. By its own admission, the PCL Trust confirmed that this “Quotation and Loan agreement”

document was used prior to populating the Delfin system. Accordingly, the only deduction is

that the consumer was only advised of the NCR registration number after the Delfin system

would have populated the “Quotation and Loan Agreement” form.

182. It further is clear that the information on the two forms used by the credit provider is not the

same. Confusion is apparent.

183. Failure to include all the required detail on the “Loan Application and Agreement” form, is

perceived in a very serious light and seen as a serious transgression of the conditions by the

credit provider.

184. Consequently, the Trust contravened section 92(1).

Findings

185. The Tribunal finds, as it appears on annexures "Bl" to "B10" of the investigation report, that PCL

Trust failed to provide consumers with pre-agreement statements and quotations which comply

with the Format set out in Form 20.

186. The Tribunal finds that the NCR number and contact number of PCL Trust were omitted from

the prescribed Form 20.

187. By omitting the aforementioned information, PCL Trust contravened section 92(1) read with

Regulation 28 (1) (b) and Form 20 of the Act.

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Contravention 5: Failure to retain records

The Act

188. Section 170 read with Regulation 55 (1) (b) (viii) respectively provides that a credit provider

must maintain records of all applications for credit, credit agreements and credit amounts in the

prescribed manner and form for a prescribed period of time.

189. General Condition 2 of the Respondent‟s Conditions of Registration require of the Respondent

to operate its business in a manner consistent with the purpose and requirements of the Act.

Applicant

190. The Applicant submitted that the Respondent had not kept any documentation in support of the

steps taken to assess a consumer‟s financial position prior to entering into a credit agreement

with a consumer.

191. The Respondent has failed to retain documents and has failed to operate its business in a

manner that is consistent with the purpose and requirements of the Act, and has therefore

contravened General Condition 2 of its Conditions of Registration read with section 52(5) of the

Act.

Analysis and findings

192. It is clear from the evidence before the Tribunal; that the Respondent was unable to provide any

current and relevant documentation or copies of documentation that led to proper affordability

assessments having been undertaken by the Respondent.

193. The Tribunal is therefore satisfied that the Respondent has contravened section 170 read with

Regulation 55 (1) (b) (viii); General Condition 2 of its Conditions of Registration read with

section 52 (5) of the Act.

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CONCLUSION

194. Consequently, the Tribunal is satisfied that the Respondent engaged in reckless lending and

other prohibited conduct by contravening the sections referred to in the preceding paragraphs

and has therefore repeatedly contravened the Act.

195. The Tribunal proceeds to consider an appropriate order.

CONSIDERATION OF AN APPROPRIATE ORDER

Applicant’s requested orders

196. The Tribunal has set out the Applicant‟s requested orders in paragraph 16 of this judgment. The

Tribunal proceeds to consider them.

Administrative fine

Applicant

197. The Applicant requested the Tribunal to impose an administrative fine. The conduct of PCL

Trust repeatedly contravenes the Act, the regulations as well as PCL Trust's conditions of

registration.

198. This conduct has caused harm to consumers and undermines the purpose of the Act, and it is

evident that all the contraventions of the Act committed by PCL Trust are serious.

Respondent

199. The PCL Trust opposes the imposition of an administrative fine. It submitted that the Applicant

failed to produce any evidence of prejudice, damage, loss or harm to consumers and denied

any allegation of such prejudice, damage, loss or harm.

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200. According to PCL Trust, the Applicant refers to only a couple of transactions concluded by the

Trust and expects the Tribunal -

(a) to draw conclusions of extreme misconduct therefrom;

(b) to speculate as to whether such conclusions can be drawn from all the transactions

ever concluded by the Respondent; and

(c) to exact severe punishment on the Respondent.

201. According to PCL Trust, the Applicant produced no evidence that any of the trust‟s consumers

have suffered a loss or damage and particularly suffered such loss or damage as a result of

unlawful conduct on the part of PCL Trust.

202. PCL Trust submitted that it never conducted its business with any nefarious or devious intent,

but at all times endeavoured to act under the law.

203. PCL Trust submitted that its customers were never exploited or taken advantage of, and that the

Applicant advanced no evidence from which that can be established.

204. PCL Trust also confirmed that it has never been found in contravention of the NCA or the

Consumer Protection Act, 2008, as the case may be. PCL Trust submitted that the allegation by

the Applicant, that "the nature and duration of the contraventions dictate that the conduct of the

Respondent has been ongoing for a substantial period”, is opportunistic and baseless.

205. Concerning a potential fine, PCL Trust reconfirmed in the alternative to the Tribunal that PCL

Trust is not conducting any business and that it has not conducted any business since 01 March

2017.

Analysis

206. In line with the findings made concerning PCL Trust‟s contraventions of the Act, the Tribunal is

satisfied that the nature of PCL Trust‟s contraventions and the consequent financial

implications for consumers justify the Tribunal imposing an administrative fine on PCL Trust.

The Act was introduced into the South African legislative landscape to curb precisely the types

of excesses that the Tribunal has found PCL Trust to have perpetrated. Consequently, the

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Tribunal has to send a clear message to PCL Trust that the Tribunal will not tolerate

contraventions of the Act.

207. Section 151 (3) sets out the factors the Tribunal must consider when determining an appropriate

fine. The Tribunal proceeds to consider each in turn.

Nature, duration, gravity and extent of the contraventions

208. The inspection report and the findings in this judgement reveal that PCL Trust‟s approach to

responsible credit provision, appears to be an ongoing and common practice. PCL Trust was

initially registered during 2007 and seemed to have been continuing operations as a credit

provider for around ten years. The Trust‟s contraventions are extremely serious and go to the

heart of PCL Trust‟s business practices.

209. The Tribunal is alive to the small sample files extracted and the contraventions identified in

those files. However, the nature and extent of the contraventions warrant serious action against

PCL Trust. A registered credit provider must not engage in conduct likely to bring the Applicant

or credit provision industry into disrepute.

210. The Tribunal is satisfied that PCL Trust‟s conduct is made worse by the failure of its trustees to

timeously and diligently advise the NCR of any changes to its operations, structure or any

possible confusion relating to its trading name. This failure placed financially stressed

consumers at risk of suffering further prejudice and losses and inhibited the NCR from

efficiently and adequately fulfilling its legislative functions of oversight and control.

211. The contraventions are serious and include, inter alia, trading under a name not registered with

the National Credit Regulator, not providing pre-agreement statements and quotations, not

conducting proper affordability assessments, and inducing consumers to sign documents which

mandate the retention of consumer instruments and personal belongings. Consumers are being

exploited by the Trust.

Loss or damage suffered as a result of the contraventions

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212. The Applicant did not place specific evidence before the Tribunal concerning the actual loss or

damage consumers suffered. However, it is reasonable for the Tribunal to conclude that

consumers have suffered loss because the Respondents at the very least charged consumers

fees without fulfilling the services required in the Act.

213. Consumers‟ loss and damage are unquantifiable. By not conducting proper affordability

assessments and granting reckless credit, consumers are exposed to financial risk.

Respondents‟ behaviour

214. The Respondents, as trustees of the PCL Trust, have not persuaded the Tribunal that they did

not know the Applicant‟s expectations of PCL Trust as credit provider. The Tribunal has found

that the Respondents failed to comply with the Act‟s prescripts and that their failure to act

diligently binds the Trust which is the entity they registered as credit provider and which they

represent as trustees.

215. There exists no plausible reason for the Respondents to be unaware of the provisions of the Act

and its statutory obligation to adhere to each of those provisions. One of its branches closed

down due to the irregular activities that were exposed, and one would believe that the

Respondents would have ensured that any other branch complied with the provisions of the

Act.

The level of profit derived from the contraventions

216. The Applicant did not place specific evidence before the Tribunal concerning the level of profit

the Trust has derived from the contraventions. Nevertheless, it is reasonable for the Tribunal to

conclude that PCL Trust derives significant profit from the activities as credit provider.

217. It does not help the trustees to implore the Tribunal to consider PCL Trust as “not having been

in operation”. At the same time, they are informed of the fact that it de facto operated despite

any proclamations by the trustees to the alternative. It does not help the trustees either to

attempt distancing themselves from the operations of PCL Trust once it becomes clear that

PCL Trust was used as the legal vehicle to conduct unlawful activities.

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218. As trustees, the fiduciary and diligent responsibility to manage PCL Trust with the utmost of

integrity cannot be waived. Similarly, the financial accountability for prohibited conduct by PCL

Trust will vest in its trustees.

219. The Tribunal found that there was no overcharging by the Trust. However, profit is derived by

entering into credit agreements with consumers who might not even qualify for a loan should a

proper affordability assessment have been conducted.

The degree to which the Respondent co-operated with the applicant

220. The Tribunal has considered that both the Applicant and the Respondents seemed to have

been frustrated by the lengthy process to conclude this matter. Concerning the investigation

processes, the Applicant indicated that the Respondent provided its co-operation during the

investigation.

Respondent‟s prior contraventions

221. There were no prior investigations or enforcement instituted by the Applicant against PCL Trust.

222. However, the nature and duration of the contraventions dictate that the conduct of PCL Trust

has been ongoing for a substantial period before the investigation.

Conclusion

223. Having regard to the foregoing factors, the factual evidence and conduct displayed, it is a

reasonable and valid contention that the Tribunal should impose an administrative fine against

the Trust. The purpose of an administrative fine is a punitive measure and one which is

warranted in this instance, especially in the interests of justice

224. The Respondents‟ conduct has displayed little or no regard for the spirit and purpose of the Act.

The Respondents‟ continued participation in the credit market places consumers at substantial

risk of further financial harm.

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The amount of the fine

225. The Applicant did not produce evidence concerning the Respondent‟s financial turnover during

the previous financial year. Consequently, the Tribunal may impose a fine that is limited to a

maximum fine of R1 000 000.00.47

226. The preamble of the Act is important. Parliament introduced the Act to, amongst other things,

promote a fair and non-discriminatory marketplace for access to consumer credit, prohibit

certain unfair credit and credit marketing practices, promote responsible credit granting, and

prohibit reckless credit granting. Consequently, protecting vulnerable consumers and ensuring

that debt counsellors and credit providers act fairly runs to the heart of the Act.

227. The Tribunal is satisfied that it must send a strong message to all credit providers, whether large

or small, that they cannot escape complying with the Act. Credit providers such as PCL Trust,

which operate through its trustees, must comply strictly with the Act.48

228. These considerations persuade the Tribunal that it is appropriate to impose an administrative

fine of R200 000.00.

ORDER

Accordingly, the Tribunal makes the following order towards the First and Second Respondents, jointly

and severally in their capacities as trustees, who are responsible for the due performance of the Third

Respondent‟s obligations to the Applicant:

229. The Respondents have repeatedly contravened the following sections of the Act:

229.1 Section 81 (2) (a) (ii) and (iii) read with Regulation 23A;

229.2 Regulation 23A (3); Regulation 23A (8); Regulation 23A (9); Regulation 23A (10); Regulation

23A (12) (a); (b) and (c); and 23A (13)

47 Section 151 (2) empowers the Tribunal to impose an administrative fine that may not exceed the greater of 10% of the

Respondent‟s annual turnover during the preceding financial year, or R1 000 000.00

48 Section 163 (1C) provides a debt counsellor may only use agents for administrative tasks relating to debt review

47

229.3 Section 81 (3) read with section 80 (1) (a);

229.4 Section 81 (3) read with section 88 (4);

229.5 Section 170 read with Regulation 55 (1) (b) (vi);

229.6 Section 92 (1) read with Regulation 28 (1) (b) and Form 20;

229.7 Section 101 (1) (c) (ii) read together with Regulation 44; and

229.8 Section 100 (1) (c), section 100 (1) (a), section 102 and section101 (1) (d) (ii) read with

section 105, section 52 and Regulation 42 (1).

230. The repeated contraventions are prohibited conduct in terms of section 150 (a) of the Act;

231. The Respondents‟ credit agreements with consumers contained in annexures “B1” to “B10” of

the Applicant‟s founding affidavit, are reckless in terms of section 80 (1) (a) and set aside.

232. The Respondent is:

232.1 Within 30 days of the date of issue of this judgment to appoint an independent auditor, who

is registered as a Chartered Accountant, to identify all open loans to determine if an

affordability assessment was conducted. All such identified loans are deemed reckless and

all of the consumers‟ rights and obligations arising under those, are hereby set aside.

232.2 Within 120 days of the Tribunal‟s order; to provide a written report to the Applicant that

details:

(i) Any and all branches that were established by the Trust to operate as credit

providers up and including the present; and

(ii) A complete list of its consumers‟ identities and other contact details, in addition to

any other contractual or other documents required by the NCR.

233. PCL Trust's registration as a credit provider with the Applicant is cancelled in terms of section

150 (g) of the Act; which cancellation is to be applied to all and any of the branches that the

PCL Trust, also trading as Prestige Cash Loans, might have established and registered with

the NCR.

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234. The PCL Trust, also trading as Prestige Cash Loans, and any branch that it might have

established or new credit provider identity that it could have registered with the NCR, are

interdicted from continuing its business as a credit provider with immediate effect;

235. The Respondents are ordered to cease engaging in any activity that requires registration with

the NCR.

236. The Third Respondent is to pay an administrative fine of R100 000.00 (one hundred thousand

rand) into the National Revenue Fund referred to in section 213 of the Constitution of the

Republic of South Africa, 1996 within 30 days of the date of this judgment. The Banking Details

of the National Revenue Fund are as follows:

Bank Name : The Standard Bank of South Africa Limited

Account Holder : Department of Trade and Industry

Branch Name : Sunnyside

Branch Code : 05100

Account Number : 370 650 026

Reference : NCT/128378/2019/57(1) and Name of Person or

Business making payment

237. There is no order as to costs.

DATED AT CENTURION ON THIS 5th DAY OF APRIL 2020

Dr MC Peenze

Presiding member

With members Adv J Simpson and Mr T Bailey concurring.

49