Supreme Court of Appeal ruling - good and bad news for consumers

The recent judgment by the Supreme Court of Appeal in Nedbank v the National Credit Regulator holds both very good and very bad news for consumers:

The Appeal Court confirmed that when the total amount of fees & interest charged on an account that is in arrears is equal to the Outstanding Capital on that account, no further interest or fees can be charged ever again. This is good news for consumers who have been unlawfully overcharged on small arrear accounts, but it does also mean that credit providers will be eager to take legal action as soon as a consumer falls into arrears, particularly on Mortgage Bonds.

The Appeal Court regrettably interpreted the conflicting wording of two sections of the National Credit Act to mean that once a credit provider has sent a Section 129 letter of Demand to a consumer who is in arrears, the account in question cannot be placed under Debt Review. For such accounts, the Debt Counsellor can only try to make voluntary arrangements with the credit provider. However, if a consumer is taken to Court by a credit provider, they can still request the Court to declare them over-indebted & refer the account to Debt Counselling in terms of Section 85 of the Act.