The National Credit Regulator deals with the question of interest charged on debts which were governed by the Usury Act and the Credit Agreements Act and under the Exemption Notice to the Usuary Act ( the micro-lenders).

They state:

“Until 31 May 2007, Usury Act interest rate caps will apply to credit transactions that fall within the ambits of the Usury Act and the Credit Agreements Act. Credit transactions entered into under the Exemption Notice will not be subject to an interest rate limitation provided the credit provider is registered with the NCR and in addition is also registered in compliance with the Exemption Notice.”

The FAQ section of the NCR’s website expands on the issue of micro-lenders and states:

Question

Are lenders who are currently registered with the MFRC expected to comply with the Usury Act Exemption Notice after 31 May 2006 or would they have to comply with the NCA?

Answer

From 1 June 2006 to 1 June 2007, lenders must continue to comply with the Usury Act Exemption Notice, as well as being registered with the NCR.

Question

What interest rates will I be allowed to charge after 1 June 2006 if I am currently registered with the MFRC? How is the interest rate to be calculated under the NCR? From when do I follow this approach?

Answer

All lenders that were registered with the MFRC before 1st June 2006 will be allowed to charge interest rates under the Usury Act Exemption Notice until 1 June 2007, from which date they will have to comply with the new limits. The calculation and disclosure, in terms of the Exemption Notice, will remain. Compliance with the Exemption Notice, therefore, remains mandatory.