- The National Credit Regulator has withdrawn its request to revoke Moneyline Financial Services’ registration as a pawnbroker.
- Mountain was found to be recklessly extending credit to consumers, most of whom were social grant recipients.
- The company is a subsidiary of Net1. Net1 owned the company which was contracted by the South African Social Security Agency to provide social grants between 2012 and 2018.
The claim against Moneyline Financial Services (Pty) for recklessly extending credit to consumers, who are mostly social grant recipients, was dropped. This means Moneyline can continue to provide loans and other services.
The National Credit Regulator (NCR) has applied to the National Consumer Court to revoke Moneyline’s registration as a pawnbroker. But last month, the NCR said it had made the decision to withdraw his candidacy.
The NCR did not respond to further questions about the reasons for its decision.
Moneyline made headlines about seven years ago when recipients began noticing unexplained deductions, like airtime and life insurance policies, from their social grants. In most cases, the deductions took place before they were able to access the funds themselves.
Moneyline is a subsidiary of Net1. Another Net1 company, Cash Paymaster Services (CPS), was contracted by the South African Social Security Agency (SASSA) to pay social benefits between 2012 and 2018. Net1 and its subsidiaries have been at the center of controversy over the payment of social allowances and allegations of reckless loan.
A search report published in 2020 by the human rights organization Black Sash and the London School of Economics and Political Science revealed that the systems put in place by Net1 through CPS – while CPS administered the SASSA grants – created an environment in which lenders provided low-risk loans to social grant recipients while charging them high-risk interest rates.
This environment, according to the report, activated lenders to use the grants as collateral for the debt.
Moneyline said it does not charge interest, only administrative fees.
NCR investigations into Moneyline’s lending practices found that Moneyline’s inclusion of grants for children and foster children in its affordability assessments for customers violated the National Credit Act.
As part of its request to deregister Moneyline, the NCR referred Moneyline to court in 2014 for reckless lending to children’s grant recipients.
The Tribunal then ruled that the complaint was well-founded and that there were “good reasons” to investigate Moneyline. The decision of the three members of the Tribunal was not unanimous.
Initially, Moneyline filed an appeal with the Tribunal in 2016 decision. The appeal, which the RNC opposed, was first heard on December 4, 2018 at the High Court in Pretoria. On August 30, 2019, the court ordered that the Tribunal be included as a defendant and the appeal hearing was adjourned to October 27, 2021.
When GroundUp contacted Lesiba Mashapa, NCR’s company secretary, for details of the hearing, he said Moneyline withdrew its appeal and NCR also withdrew its request to remove the company from the supplier’s list. credit.
“The matter has been settled and therefore the litigation between NCR and Moneyline is over,” he said.
Moneyline remains on the credit provider’s list, Mashapa said.
According to Tribunal Registrar Lucky Rabotapi, claimants like the NCR in this case can withdraw their claims without giving the Tribunal a reason. When parties reach a settlement outside of court proceedings, the court only checks to make sure the settlement is in accordance with the law, he said.
“There was no mention of a settlement in court,” he said.
Meanwhile, Black Sash’s national advocacy director, Hoodah Abrahams-Fayker, said the organization was disappointed that Moneyline had not been held accountable “for its predatory financial practices in the past, targeting grant recipients. social”.
She said they would continue to watch Moneyline.
Tiaan Jonker, Principal of Smit Sewgoolam Incorporated, who are the attorneys for Moneyline, said, “Moneyline is committed to providing lending solutions in full compliance with national credit law in its chosen market of consumers and merchants under -banked and underserved in South Africa.
GroundUp first contacted NCR on October 27. The NCR promised to respond but had not done so at the time of publication.