Johannesburg - Credit grantors could face fines of up to R10m when the National Credit Act kicks in on June 1 a major software maker said on Wednesday.
Nobby Cerone, CEO of PS&S, said thousands of credit grantors who are not registered with the National Credit Regulator (NCR) or who exceed the prescribed interest rates may face the multi-million rand fines.
The company, whose Smartfin software package is used by large numbers of credit grantors including micro lenders to determine the credit worthiness of prospective clients confirmed that many smaller credit grantors - and even some bigger ones - had still not registered with the NCR.
"We get large numbers of telephone calls from credit grantors which includes everybody from micro financiers to furniture stores and the local butchery who want to know from us what they need to do to comply," he said.
The Smartfin package, which is used for credit vetting by large numbers of credit grantors, is also thus far the only suite that is fully compliant with all the rules and regulations of the NCR.
A 'mad scramble'
Cerone said the reason why "this mad scramble" was underway was because many credit grantors were unfamiliar with the exact requirements of the act and even more had simply left it too late.
He said: "Seemingly the word has not gone out that everybody who extends credit -and that includes employers who lend money to employees - has to register.
"The act is very clear on the subject of fines. It makes provision for fines of up to ten percent of the turnover of a credit grantor up to a maximum of R10m.
"There are even some credit grantors out there who do not believe that government is serious about this legislation and that it is simply going to go away."
Employers who made loans to employees would face penalties if they did not comply with the National Credit Act, he said.
Employers face fines and imprisonment
"Employers who signed credit agreements with 100 or more employees or lent staff more than R500 000 would face a fine or imprisonment if they did not register as credit providers to satisfy the criteria of the new act.
"Employee loans would be classified as credit agreements if there was a deferral of payment and a fee, charge or interest levied on the deferred amount.
"The National Credit Act applies to every credit agreement between parties dealing at arm's length and made within, or having an effect within, South Africa, "he said.
Cerone was of the view that much of the credit that was being granted in the run-up to the June 1 deadline would come up for review.
"At the moment, credit is granted across the board to anybody and everybody who asks for it - as long as they have a clean credit record.
"We are seeing record amounts of credit being granted by everybody who is in the credit granting industry."
He predicted that a significant percentage of the credit being granted now would come up for review in June when the credit review and debt cancellation mechanisms of the National Credit Act becomes law.