Reckless lending occurs when a credit provider lends money without doing an affordability assessment on the consumer. If you feel you have a case of reckless lending get in touch with ezDebt.

Reckless lending is something that has become a vital concern of ezDebt, as many South African consumers have fallen victim to it. If you feel you have entered into a credit agreement and witnessed a case of reckless lending, immediately contact ezDebt

According to the National Credit Act, the regulations about reckless lending go as follows:

80. (1) A credit agreement is reckless if, 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 terms of section 119(4)-
(a) the credit provider failed to conduct an assessment as required by section 81(2), irrespective of what the outcome of such an assessment might have concluded at the time; or
(b) the credit provider, having conducted an assessment as required by section 81(2), entered into the credit agreement with the consumer despite the fact that the preponderance of information available to the credit provider indicated that-
(i) the consumer did not generally understand or appreciate the consumer’s risks, costs or obligations under the proposed credit agreement; or
(ii) entering into that credit agreement would make the consumer over-indebted.

According to ezDebt South Africa’s, an account will be considered as reckless if:

  • The credit provider didn’t do an assessment
  • The client did not understand the risks of the credit
  • The credit caused the client to become over-indebted

It is a complete defence for the credit provider to say that the client was dishonest.

Reckless lending can be identified by the following:

  • The client’s net income is less than their debt obligations per credit report
  • No recent change of circumstance or accounts taken out afterwards
  • No fraudulent activity by the client

The credit agreement will have to have been entered into after the 1st June 2007, and the information on the agreement would have to be correct at the time of application so that the information you have given to the credit provider is truthful. If the credit agreement is reckless then we would recommend taking this to court and the magistrate would be able to make a judgement on the matter.

Reckless lending does not apply to agreements before June 2007 or any of the following:

• A school loan or student loan
• An emergency loan
• A public interest credit agreement
• A pawn transaction
• An incidental credit agreement


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