Page 87 - Q&A 2019/2020

Should you kiss your money goodbye if you are
not registered as a credit provider?

Eldon Ward
April 2019

“I lent a relatively large amount to an ex-business partner of mine to help him
out of some financial trouble. When I asked him to start paying the loan and
interest back as per our loan agreement, he told me that because I was not a
registered credit provider, the loan agreement was invalid and I couldn’t claim
my money back from him. Surely he can’t get off scot-free just because I was
not aware that I needed to register?”

An objective of the National Credit Act (“NCA”) is to discourage the provision of
credit outside its regulatory framework in order to protect vulnerable consumers
and help decrease the inequality that exists between credit providers and
consumers.

Accordingly, the NCA provides that persons generally who provide credit to
others, must be registered with the National Credit Regulator, with any failure
to so register rendering any agreement entered into by such credit provider
as void. What this in essence means is that if a credit provider was required to
register and did not do so, the agreement in terms of which it provides credit
will be unlawful.
But does that leave a credit provider completely without recourse?

Our courts have held that where loan agreements have been declared illegal
by virtue of the fact that the credit provider was not registered when he should
have been, the credit provider could use the common law claim of unjustified
enrichment to claim his money back provided the requirements for the claim
are met and the credit provider acted in good faith and was not aware of the
requirement to register.
Litigation The merits of each case however are different and must be treated as such.
Our advice is to contact your attorney to discuss your situation and identify the
avenues, such as a possible unjustified enrichment claim, you can consider to
get your money back.

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