Unfair discrimination against low income consumers has become an increasing problem in South Africa. The problem at home is rooted in pre-democratic South Africa The Apartheid regime was not only responsible for the reinforcement of racial division and discrimination based on racial disparities in the Republic but it was also responsible for economic disadvantage on people of colour during its reign. During Apartheid the minority white and higher income consumers were afforded credit more leniently while paying less stringent interest.
This article will explore the legislative protection afforded to consumers in South Africa and specifically whether a racial imbalance exists with regard to the protection afforded to higher income consumers compared in comparison to lower income consumers in the credit market. The reason for the latter, is that this group of consumers are prone to the extension of informal credit at exorbitant interest rates and credit levies to the advantage of their wealthier peers in the South African credit market, namely higher income consumers who are extended mainstream credit at privileged costs.
Current Remedies
Sections 61(1) of the National Credit Act 34 of 2005 (NCA) prohibits direct and indirect unfair discrimination on grounds specified in section 9 of the Constitution and Chapter Two of Promotion of Equality and Prevention of Unfair Discrimination Act (PEPUDA). This provision merely promotes a fair and non-discriminatory market for consumers to participate in but does not impose guidelines on how consumers may find relief once they have consequently been unfairly discriminated against or become overindebted.
Correspondingly, the Consumer Protection Act 68 of 2008 (CPA) is silent on resolutions for consumers who have been unfairly discriminated against in the credit market. Furthermore, the Constitution provides regulatory provisions for the prohibition and prevention of unfair discrimination but is similarly reticent on direct relief for it.
PEPUDA is presently the only piece of legislation which in addition to promoting equality in sections 24, 25 and 26, prohibits unfair discrimination and provides guidelines for what affected individuals and associations of persons may do once they have become victims of unfair discrimination. Relief is indirectly provided by Section 16 of PEPUDA as it envisages therein that victims of discrimination have access to equality courts from which they may seek assistance to resolve their disputes.
Long-Term Reform
Legislations such as the NCA and CPA which were inherently designed and enacted to protect the rights and freedoms of the consumer in South Africa should impose regulations for persons who have proven that they have been unfairly discriminated against in the credit market. The latter should enable consumers to access practical remedies to combat being unfairly discriminated against.
The NCA and CPA are the primary sources which regulate the credit industry in South Africa, therefore it would only make legislative sense that a source of first instance for consumers would also impose remedial action when the aforementioned consumers are discriminated against. The content of the remedial action proposed by the acts will need to be carefully formulated to address a variety of issues resulting from discrimination in the credit market.
Conclusion
It can be concluded that there are existing measures in place to combat unfair discrimination in the credit market but that they prove to be insufficient to address the enormity of the problem. It was ascertained that for the existing measures to become adequate, they would need to be radically reformed to tackle the unequal treatment of persons unfairly discriminated against and specifically unequally treated low income consumers in this instance.
Contact us at SchoemanLaw Inc for your Credit and Consumer Law enquires.
Guest Author: Casey Juries (Legal Intern at SchoemanLaw Inc – September 2020)
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