Social grants must be spent on children – not loans

Some parents, both natural and foster, have been stating their child support and foster care grants as income when applying for loans, and at least one money lender was happy to go along with that.

SPEND ON A CHILD, NOT ON A LOAN: Apparently it had to be said – child and foster care grants are not general income
Image: Supplied

But the National Consumer Tribunal made a finding this week that those grants are to be used solely for the benefit of “third parties” – in other words, the children in those adults’ care.

The tribunal handed down a judgment in favour of the National Credit Regulator (NCR) against a Humansdorp micro lender trading as JMK Cash Loans, finding them guilty of a host of illegal practices, including:

  • Charging excessive interest – more than 30% per month, when the legal limit is 5% per month for six months;
  • Retaining their clients’ Sassa and bank cards along with their PIN codes;
  • Operating despite their registration with the NCR having lapsed; and
  • Not conducting affordability checks.

The business was ordered to pay a fine of R800,000 within 30 days.

“It appears that (JMK Cash Loans) has ignored the requirements of the National Credit Act and exploited consumers who appear to lack knowledge about their consumer rights,” the tribunal said in its judgment.

It emerged during the joint investigation by Sassa, the Hawks and the Eastern Cape’s consumer protection office that child support and foster care social grants were being regarded as loan applicants’ income.

“This judgment clarifies that child support and foster care social grants are not to be used as consumer income in credit applications,” said the NCR’s CEO, Nomsa Motshegare. “Credit providers are warned to observe this judgment.”

BY Wendy Knowler- TimesLIVE
Source: TMG Digital

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