The National Credit Regulator (NCR) has announced that it has referred Foschini Retail Group (Pty)(Foschini) to the National Consumer Tribunal (Tribunal) for breaching the National Credit Act by charging consumers a club fee on credit agreements. The charging of a club fee on credit agreements is not permitted by the NCA. The club fee charged by Foschini is reflected in consumers’ credit agreements.
“The National Credit Act allows consumers to be given a quotation which sets out the cost of credit before signing credit agreements. Consumers should request this quotation from their credit providers so that they can properly check the cost of credit that is being offered,” saysJacqueline Peters, manager of the investigations and enforcement department at the NCR.
The NCR is asking the Tribunal to:
- Order Foschini to refund the affected consumers the club fees charged;
- Order Foschini to conduct an independent audit into its loan book to determine the number of consumers to be refunded;
- Interdict Foschini from charging consumers a club fee on credit agreements;
- Impose an appropriate administrative fine on Foschini.
Foschini’s response
The Foschini Retail Group (FRG) claims it is the selling ofmagazine subscriptions to consumers, which the National Credit Regulator (“NCR”) considers to be “charging” a “fee”. “TFG’s Club products are optional magazine subscriptions with insurance and other benefits which can be subscribed to at application stage, or later via telemarketing and other marketing channels. Consumers can cancel their subscription at any stage and without penalty,” said FRG.
FRG added: “The Company is of the view that FRG’s referral is based on an incorrect interpretation of the applicable legislation, as the NCA does not limit which products retailers may sell to its customers on their credit accounts. This was also recently confirmed by the NCT in a similar case against Lewis Stores. The referral is also similar to the referrals regarding Club “fees” against Edcon and Mr Price.”
It said that it will oppose FRG’s referral to the NCT as it does not ‘agree with the view held by the NCR’. It has consulted legal counsel and slammed the NCR’s position as ‘untenable’ with ‘no rational basis’.
More investigations?
Foschini are unlikely to be the only retailer to be investigated in this way. Earlier this year in May, Justmoney reported how the NCR tackled Edcon in a similar fashion. The NCR said will continue to conduct industry-wide investigations on the cost of credit to root out illegal charges and fees that consumers are charged.