Abstract
Responsible lending has become a very pertinent issue on the agenda of credit regulators across the globe who seek to combat the causes of consumer over-indebtedness. In this context the use of "pre-agreement assessment" as a tool to filter out those instances where, based on a consumer's creditworthiness or ability to repay, credit should not be granted to such a consumer, is a feature common to the lending regimes of various jurisdictions. This contribution consists of two parts: Part 1 provides a critical discussion of the reckless credit provisions of the National Credit Act 34 of 2005. Part 2 details the responsible lending measures contained in the EU Consumer Credit Directive and the EU Mortgage Credit Directive and provides an appraisal of the responsible lending measures introduced by Belgium, being a jurisdiction that has always been very pro-active in the context of consumer credit protection.
 
 
Highlights
In the European Union the harmonisation of consumer credit legislation and mortgage credit legislation has taken place in order to realise an internal credit market and in order to protect consumers
This directive was based on the principle of minimum harmonisation, which implies that the directive determines only the minimum level of protection that must be offered to consumers in each member state and does not prohibit member states from maintaining or introducing rules offering additional protection to consumers
Apart from the fact that South Africa takes a consolidated approach to credit regulation and has a single, comprehensive Act in which all credit, including mortgage credit, is regulated, as opposed to the position in the EU and Regulation (EU) and Belgium where the regulation of consumer credit and mortgage credit is done by means of two separate directives, there are notable differences in the scope of application ratione personae between the credit frameworks of these jurisdictions
Summary
Apart from the fact that South Africa takes a consolidated approach to credit regulation and has a single, comprehensive Act in which all credit, including mortgage credit, is regulated, as opposed to the position in the EU and Belgium where the regulation of consumer credit and mortgage credit is done by means of two separate directives, there are notable differences in the scope of application ratione personae between the credit frameworks of these jurisdictions. While article 20 of the MCD requires the creditor to obtain the information from relevant internal and external sources such as the consumer, including information provided during the credit application process, neither section 81(2) of the NCA nor the Final Affordability Regulations has such a requirement. The Final Affordability Assessment Regulations under the NCA at first glance appear to mandate the verification of the consumer's gross income only and prescribe exactly what documentation is relevant for such purpose It must be borne in mind that in the process of verifying the consumer's gross income the credit provider will be able to verify the consumer's statutory deductions and that by undertaking the mandatory consultation of the credit bureau information the consumer's existing debt obligations can be verified. Contrary to what is the case in Europe, the creditor can be held liable for providing reckless credit when he provided credit the consumer did not understand the risks, costs and obligations of obtaining the credit
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