Clobbering

The NCR has found that Rudco Finance Company has contravened a number of provisions of the National Credit Act. Rudco raised warning flags because it was offering to fix its clients home loans at 6% a year, for up to 20 years.

The NCR found that Rudco had contravened the Act in five primary areas. These are:

• It requires consumers to make loan repayments and monthly services fees before loans have been advanced.
  
• Rudco charges monthly service fees ranging between R500 and R1,500 per month, which is in excess of the R50 per month prescribed in the NCA.
  
• It does not provide consumers with quotations, pre-agreement statements or credit agreements that meet the requirements of the Act.
  
• "The advertisements which are placed by Rudco Finance or by its agents contain statements that are misleading and that contravene the National Credit Act," says the NCR. "These advertisements include print media, pamphlets and e-mails. The advertisements typically refer to an 'interest rate at 6%' or loans 'at zero % interest'. In certain instances these advertisements may also indicate the monthly payments.
  "These advertisements invite consumers to enter into agreements which do not comply with the Act and do not contain information in respect of the full cost of the credit agreements, as prescribed in the regulations."
  
• Rudco does not meet the requirements of the Act in respect of its agents, does not provide its agents with identification cards or adequate training, and does not maintain a register of its agents in the prescribed manner or form.