A new court ruling says consumers no longer have to provide payslips or bank statements when applying for credit.
Clothing retailers Truworths, Foschini and Mr Price went to court to challenge why 'proof of income' must be a prerequisite for credit applications.
Law firm Norton Rose Fulbright represented the retail giants in court and won the case against the National Credit Act (NCA) this week.
Consumer journalist Wendy Knowler explains that the court ruling will put an end to what was a very discriminatory practice.
She believes that the requirement for income documents was excluding many consumers who could pay off credit installments, including informal traders, freelancers and self-employed residents.
Although retailers will have more discretion in the credit assessment process, Knowler says they still have to conduct affordability assessments in line with the NCA laws.
The credit applicant will also still be required to provide authentic identification (ID), she says.
The ruling affects a lot of people in the country who don't have access to credit at the moment.— Wendy Knowler, consumer journalist
All the checks and balances remain, it's just relaxing the overly strict requirement of documentation.— Wendy Knowler, consumer journalist
Effectively, consumers applying for credit no longer need to provide any particular form of documentation proving their income.— Wendy Knowler, consumer journalist
It was considered that this very prescriptive and old school requirement of payslips and bank statements wasn't appropriate for the South African population.— Wendy Knowler, consumer journalist
Knowler explains the implications of the ruling and answers other consumer-related queries.
Take a listen to the discussion during the ConsumerTalk feature: