Credit consumers of retail stores like Edgars, Jet, CNA, Red Square and Boardmans stand to gain a small windfall after the National Consumer Tribunal ordered that the club fees they charge to their customers is illegal. This is from a ruling handed down by the Tribunal this week against the parent company of these stores Edcon.
Edcon, is one of South Africa’s largest retailing group with annual sales of abut R30 billion rands. The company has been ordered to refund the affected customers. This could be a very large refund given the fact that Edcon has a large number of credit customers.
The Tribunal said the club fee is unlawful and in contravention of the National Credit Act (NCA).
This judgement comes after an investigation by the National Credit Regulator (NCR) revealed Edcon has charged consumers a club fee on credit agreements. “It is now settled that the charging of a club fee on credit agreements is not permitted by the NCA”, says Jacqueline Peters, Manager: Investigations and Enforcement at the National Credit Regulator.
The Tribunal in its judgement said that the intention of the NCA is very clear when it relates to credit agreements. The NCA does not allow for any other fees or charges or costs to be included in the credit agreement or credit agreement documents, irrespective of the nature of the charge, fee or cost.
The NCR said it will approach Edcon to request an independent audit of their loan book to establish the number of consumers to be refunded and the total amount to be refunded from 2007 to date. A hearing date will be set by the Tribunal to hear argument on the quantum of the administrative fine.
“This judgement provides clarity to the retailers that they should observe the closed list of fees and charges provided for in the NCA. Consumers are urged to request the quotation from their credit providers so that they can properly check the cost of credit that is being offered”, says Peters.