NOMPU SIZIBA: In December 2019 the Pretoria High Court upheld a ruling by the National Consumer Tribunal that Shoprite must pay a fine of R1 million. This was as a result of the National Credit Regulator conducting an investigation which found that Shoprite had engaged in reckless lending to its customers, the majority of whom are said to have been elderly and low-income earners, vulnerable people in society.
Well, to tell us more, I’m joined on the line by Roy Stocker, the senior legal advisor to the National Credit Regulator. Thanks very much, Roy for joining us. What prompted the National Credit Regulator to investigate Shoprite’s lending practices?
ROY STOCKER: Hi there. Well, it started out simply as the regulator came out with normal enforcement functions and monitoring functions of the credit market. We were in fact conducting a statistical exercise when we picked up some issues in a number of credit-providing affordability-assessment processes and procedures. One of the credit providers that we identified was Shoprite, and that led us to initiating a full investigation.
NOMPU SIZIBA: What were the key findings of the investigation into Shoprite?
ROY STOCKER: Well, what we’d found is that Shoprite would carry out an affordability assessment. It was quite diligent in that respect. It would calculate a consumer’s income, it would calculate the consumer’s expenditure, it would obtain all the necessary documentation, such as credit bureau reports. Then, quite strangely in fact, it would then, after it had made a calculation of the consumer’s disposable income available, it would use some creative methods to try and create affordability for a consumer when there was none.
NOMPU SIZIBA: So it basically did some jiggery-pokery in the whole thing?
ROY STOCKER: More or less, yes. Just one example, one of the consumers had a negative disposable income of more than R9 000. In other words, the consumer’s expenditure was already more that their income, and [he or she] was already over-indebted. Then Shoprite would take into account strange factors, like the consumer was married and it [Shoprite] would just make the assumption that the consumer’s spouse would be able to contribute without actually investigating what the spouse’s income was, or anything to that effect.
NOMPU SIZIBA: The R1 million is hardly going to penalise Shoprite, but what’s interesting to me is that the National Consumer Tribunal ruled that Shoprite must appoint a debt counsellor for those clients who were identified as potential victims of reckless lending. Does this then mean that Shoprite runs the risk of not being repaid by those clients if, in their individual cases, it’s found that Shoprite was reckless?
ROY STOCKER: It depends on the assessment that the debt counsellor will make. What the debt counsellor can do is either make a decision to set aside the consumer’s repayment obligations, or simply suspend it to give the consumer some breathing room to repay those debts. But it will depend on the assessment made by the debt counsellor.
NOMPU SIZIBA: Roy, do you think that this conduct is limited to Shoprite or is the NCR casting its investigative net wider to other retailers?
ROY STOCKER: We are always monitoring the market, and if we receive complaints we do investigate those. The level of over-indebtedness in the market would indicate that it’s probably not limited to Shoprite, and we will investigate and prosecute wherever we find other retailers contravening the act.
NOMPU SIZIBA: It does seem crazy that a lender would look to lend to those people [whose] conscience may struggle to meet their financial obligations, especially in the case in pensioners and those on low incomes.
ROY STOCKER: Yes, it confounds you and me both. I think this is a question that could be best put to some others. But perhaps there are some – and I’m speculating here – inappropriate incentive scheme for the various branches; or I don’t know what could prompt [them] to do this.
NOMPU SIZIBA: I understand that the NCR is appealing to consumers out there, if they feel that they’ve been victims of reckless lending, to get in touch with the organisation. Where can people make contact?
ROY STOCKER: The best way to make contact is to send an email to complaints@NCR.org.za.
NOMPU SIZIBA: Okay, super. Alright, Roy, very interesting revelations from you on that one. Thank you very much for your time, sir.