Reckless lending

A credit agreement is reckless where;

• At the time that the agreement was made, or at the time when the amount approved in terms of the agreement is increased, other than an increase in credit limit;
• the credit provider failed to conduct an assessment as required by Section 26, irrespective of what the outcome of such an assessment might have concluded at the time; or
• The credit provider, having conducted an assessment as required by Section 26, entered into the credit agreement with the consumer despite the fact that the preponderance of information available to the credit provider indicated that the consumer did not understand or appreciate the risks, costs or obligations of the consumer under the proposed credit agreement; or
  ii. Entering into that credit agreement would make the consumer over indebted or further over-indebted.

Where a credit provider has entered into a reckless credit agreement with a consumer;

• The Financial Services Regulatory Authority may exercise any of its powers or functions as it deems appropriate, including acting against the credit provider in terms of Section 67 of the Financial Services Regulatory Authority Act; or
• Despite any provision of law or agreement to the contrary, on application by the consumer or in any court proceedings in which a credit agreement is being considered, a court may declare that the credit agreement is reckless as determined in this Act