Credit regulator withdraws action against controversial money lender

  • The National Credit Regulator withdrew its request to revoke Moneyline Financial Services’ registration as a money lender.
  • Mountain was found to recklessly extend credit to consumers, most of whom were recipients of social subsidies.
  • The company is a subsidiary of Net1. Net1 was the owner of the company which was hired by the South African Social Security Agency to pay social benefits between 2012 and 2018.

The claim against Moneyline Financial Services (Pty) for recklessly granting credit to consumers, who are mostly recipients of social subsidies, has been dropped. This means that Moneyline can continue to provide loans and other services.

The National Credit Regulator (NCR) has asked the National Consumer Court to revoke Moneyline’s registration as a money lender. But last month, the NCR said it made the decision to withdraw its request.

The NCR did not respond to further questions on the reasons for its decision.

Moneyline grabbed the headlines about seven years ago, when recipients began to notice unexplained deductions, like airtime and life insurance policies, on their social grants. In most cases, the deductions took place before they could access the funds themselves.

Moneyline is a subsidiary of Net1. Another Net1 company, Cash Paymaster Services (CPS), was hired by the South African Social Security Agency (SASSA) to pay social benefits between 2012 and 2018. Net1 and its subsidiaries were at the center of controversies over the payment social allowances and claims of reckless loan.

A search report published in 2020 by human rights organization Black Sash and the London School of Economics and Political Science found that the systems Net1 set up through CPS – while CPS administered the SASSA grants – created an environment in which lenders provided low risk loans to recipients of social grants. while charging them high risk interest rates.

This environment, according to the report, activated lenders use grants as collateral for debt.

Moneyline said it does not charge interest, only an administrative fee.

NCR investigations into Moneyline’s lending practices have found that Moneyline’s inclusion of child and foster care allowances in its client affordability assessments violates the National Credit Law.

As part of its request to cancel Moneyline’s registration, the RCN referred Moneyline to court in 2014 for reckless lending to recipients of children’s grants.

The Tribunal then ruled that the complaint was valid and that there were “good reasons” to investigate Moneyline. The decision of the three members of the Tribunal was not unanimous.

As a first step, Moneyline filed an appeal with the Tribunal in 2016 decision. The appeal, which the NCR opposed, was first heard on December 4, 2018 by 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 postponed to October 27, 2021.

When GroundUp contacted Lesiba Mashapa, secretary of the NCR company, for details of the hearing, he said that Moneyline had withdrawn its appeal and that NCR also withdrew its request to remove the company from the list of suppliers of credit.

“The case has been settled and the dispute between NCR and Moneyline is therefore closed,” he said.

Moneyline remains on the lending provider’s list, Mashapa said.

According to the Registrar of the Tribunal, Lucky Rabotapi, claimants like the NCR in this case may withdraw their claim without providing a reason to the Tribunal. When parties reach a settlement outside of court proceedings, the court only checks that the settlement is in accordance with the law, he said.

“There was no mention of a settlement at the Tribunal,” he said.

Meanwhile, Hoodah Abrahams-Fayker, head of national advocacy for Black Sash, said the organization was disappointed that Moneyline had not been held accountable “for its predatory financial practices in the past, targeting social grant recipients. “.

She said they would continue to watch Moneyline.

Tiaan Jonker, Director of Smit Sewgoolam Incorporated, who are the attorneys for Moneyline, said: “Moneyline is committed to providing lending solutions in full compliance with the National Credit Act in its preferred market of consumers and sub-merchants. 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.


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