Supreme Court of Appeal rules in favour of SAFPS for retaining fraud information

National Credit Regulator wanted to consider listing of fraudsters as ‘negative credit information’

The Southern African Fraud Prevention Service (SAFPS) has won a case against the National Credit Regulator (NCR).

“This is critical for the work done by the SAFPS,” Manie van Schalkwyk of SAFPS said in a statement today.

SAFPS was incorporated in 2000 as a non-profit corporation by the major banks to combat fraud in commerce. Its current members include most major credit providers in South Africa, some insurance companies as well as SARS, the Financial Intelligence Centre and the SA Reserve Bank.

In addition, SAFPS serves to protect consumers particularly in cases of identity theft and where consumers’ identity has been compromised.  “This is a free service and consumers are encouraged to use it.”

The dispute, which led to the Supreme Court of Appeal case, concerned the time period for which fraud information is listed on the SAFPS database.

The NCR contended that the information in question was negative credit information that could not be retained for longer than one year. SAFPS said that fraud information could not be viewed in the same light as negative credit information and relied on the predictive nature of the fraud information which had a relevant bearing for 10 years.

The nucleus of the judgment rests on the purposes of the National Credit Act.  This includes to “promote a sustainable and responsible credit market, credit industry, and to protect consumers”.

Van Schalkwyk added, “Further to this, the judgment gives guidance on the manner in which to interpret statute, and that it should always lead to sensible and business-like results.  To illustrate this point the court uses an example of a person who has lost his job and due to prolonged lack of income gets sequestrated.  Later the person earns some income, settles the debt and gets rehabilitated.  The details of this person will remain on the credit bureau database for 10 years.  But the person who is listed for fraud, who lies to credit providers, manufactures payslips and bank statements and misrepresents the facts with the intention never to repay the debt, will be removed after one year.

“The court makes it clear that by looking at this example the NCR’s interpretation of statute ‘leads to patently insensible and unbusiness-like results and cuts across the purposes of the NCA – it would undermine the ability of the financial industry to protect itself against fraud and in doing so, protect fraudsters and not the victims of fraud; it would not protect consumers.’ This interpretation does not promote a responsible and sustainable credit market or credit industry and does not protect consumers.”

Van Schalkwyk continued: “We welcome the SCA judgment and see this as a vote of confidence in our work. In the same breath we recognise the very important work of the NCR and will continue to support the regulator with our efforts to fight fraud and financial crime and protect consumers against fraudsters.”


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