Government steps in to protect consumers from "greedy" credit providers

Government has introduced the new Credit Life Insurance Regulation under the National Credit Act to cap the cost of cover given to consumers when borrowing from credit providers.

Company Secretary at National Credit Regulator, Lesiba Mashapa says the new regulation aims to regulate credit life insurance premiums which are charged to consumer when entering into credit agreements.

He says even lower income earners pay exorbitant amounts for this insurance, which is not fair.

Read: Reckless lending is still common practice in SA

This regulation introduces a premium cap of R4.50 month on each R1 000 borrowed.

Lesiba Mashapa, Company Secretary at National Credit Regulator

According to Mashapa, the premiums currently charged to consumers vary. He says the highest they have seen is R120 for each R700 borrowed.

This was a very abusive money making scheme.

Lesiba Mashapa, Company Secretary at National Credit Regulator

Many credit providers had a chance to lower their premiums when it became clear that the risk profile of their consumers is very low in the sense that there are very few claims and that hasn't happened.

Lesiba Mashapa, Company Secretary at National Credit Regulator

That is why government has decided to introduce these regulations.

Lesiba Mashapa, Company Secretary at National Credit Regulator

To hear more of this interview, listen below:

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