Capitec Bank has rejected claims that it has exploited its clients through a one-month loan facility, following accusations that it has contravened the National Credit Act.<\/p>\n
Summit Financial Partners is suing the bank for allegedly breaking the country\u2019s credit laws by offering short-term unsecured loans in a manner that amounts to ‘reckless lending’.<\/span><\/p>\n According to Summit Financial Partners, Capitec customers were able to borrow up to R5,000 each month under the product, which has since been discontinued. So instead of being a short-term loan, the product was closer to a credit facility, or revolving credit account.<\/p>\n The financial advisory firm, which helps its clients sort out debt problems, said that Capitec also charged a fee each time a customer took out a loan.<\/p>\n It accused the bank of failing to conduct affordability checks on its customers who took up successive short-term loans.<\/p>\n Capitec responds to allegations<\/strong><\/p>\n Capitec has defended the loan in question noting that it was\u00a0a one-month loan similar to what other banks provide and is structured to enable easier access for clients.<\/p>\n Carl Fischer, executive\u00a0for marketing and corporate affairs at Capitec said that the court charges were brought due to this\u00a0fundamental misunderstanding of how the product worked.<\/p>\n The product was discontinued and replaced with a credit facility in 2015.<\/p>\n He provided the following statement on the matter:<\/p>\n “The dispute is of a technical nature and the process of credit assessment and pricing are in accordance with the requirements of the National Credit Act. We strongly disagree with the allegations made regarding its legality.<\/p>\n “We believe statements and allegations have been made that are not correct, due to a technical misunderstanding of the product. The loan in question is a one-month loan, which most credit providers offer. Some other banks also offer this type of product.<\/p>\n “The application process (which is being disputed) was adjusted to enable more convenient, easier access for clients. Once a client has physically applied in branch, the first time, the process enables the client to take another one-month loan, remotely in a following month.<\/p>\n “A credit assessment is redone for every loan application. The price charged for the loan is well within the pricing defined by the National Credit Act (NCA), and the loan is in accordance with the legal requirements of the NCA.<\/p>\n “Clients are in no way exploited, and default rates on this loan are no higher than on 12 or 24 month loans.<\/p>\n “We will be replying to all specific allegations made by SummitFin in court papers and before the court.”<\/p><\/blockquote>\n Capitec hit with \u2018reckless lending\u2019 charges<\/strong><\/a><\/p>\n South African bank ranked best in the world<\/strong><\/a><\/p>\nMore on Capitec<\/h3>\n