Shoprite guilty of reckless lending, fined R1m
- Staff Writer: Yolandi Groenewald
Shoprite has been fined R1m after being convicted of reckless lending. The National Consumer Tribunal handed down judgment on Wednesday, after a probe showed that Shoprite did not conduct adequate checks to find out if its lenders could service its loans.
National Credit Regulator (NCR) CEO Nomsa Motshegare said its investigation revealed Shoprite entered into credit agreements with consumers without conducting a reasonable and objective assessment of their ability to afford the loans.
“Some of the conduct of Shoprite that was found to be in contravention of the National Credit Act (NCA) was that Shoprite, when assessing whether a consumer could afford a loan or not, took into account unverified income of another person, such as a spouse or a life partner,” said Motshegare.
The NCR in 2015 referred the retailer to the National Consumer Tribunal in a probe for reckless lending, after raising two matters in which Shoprite could have contravened the National Credit Act.
The credit regulator said the retailer’s business units Shoprite Investments and Shoprite Insurance Company sold retrenchment and occupational disability cover to pensioners and consumers receiving government grants.
The tribunal found that Shoprite committed prohibited conduct under the NCA, and imposed a fine of R1m against the retailer.
The tribunal also ordered Shoprite to appoint a debt counsellor at its own costs to assess if the consumers mentioned in the referral are over-indebted.
“The NCR believes that this judgment by the tribunal reaffirms the undesirability of reckless lending in our society,” said Motshegare.
In a statement issued by the Shoprite Group acknowledged that the National Consumer Tribunal found that one of its subsidiaries extended credit to some of its customers to buy goods from its OK Furniture stores too easily.
This matter relates to credit agreements concluded in June 2013 and June 2014 with nine consumers from amongst thousands. In all these cases the credit extended was settled in full by the customers concerned.
The National Credit Act is a complex piece of legislation, as acknowledged by the Tribunal. The credit granting offices adhere to strict measures and are satisfied that the current process serves the best interests of its customers and is in compliance with legislation.
