Shoprite guilty of reckless lending, fined R1m

Sep 06 2017 11:00
Yolandi Groenewald

Johannesburg - Shoprite has been fined R1m after being convicted of reckless lending.

The National Consumer Tribunal handed down judgment on Wednesday, after a probe showed that Shoprite did not conduct adequate checks to find out if its lenders could service its loans.

National Credit Regulator (NCR) CEO Nomsa Motshegare said its investigation revealed Shoprite entered into credit agreements with consumers without conducting a reasonable and objective assessment of their ability to afford the loans.

“Some of the conduct of Shoprite that was found to be in contravention of the National Credit Act (NCA) was that Shoprite, when assessing whether a consumer could afford a loan or not, took into account unverified income of another person, such as a spouse or a life partner,” said Motshegare.

The NCR in 2015 referred the retailer to the National Consumer Tribunal in a probe for reckless lending, after raising two matters in which Shoprite could have contravened the National Credit Act. 

The credit regulator said the retailer’s business units Shoprite Investments and Shoprite Insurance Company sold retrenchment and occupational disability cover to pensioners and consumers receiving government grants. 

The tribunal found that Shoprite committed prohibited conduct under the NCA, and imposed a fine of R1m against the retailer.

The tribunal also ordered Shoprite to appoint a debt counsellor at its own costs to assess if the consumers mentioned in the referral are over-indebted.

“The NCR believes that this judgment by the tribunal reaffirms the undesirability of reckless lending in our society,” said Motshegare.

Fin24 is awaiting comment from Shoprite.

SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.

Read Fin24's top stories trending on Twitter:

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest. 24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

shoprite  |  ncr  |  nca  |  lending  |  retail  |  credit  |  debt



Company Snapshot

We're talking about: MINI BUDGET

Finance Minister Malusi Gigaba has laid bare South Africa's economic woes. Visit our Mini Budget Special for all the action.

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

Free education in South Africa is:

Previous results · Suggest a vote