TIPOS DE LECTURA

Otto and Grové’s second-generation consumer credit legislation was so called because it applied for the first time on a national scale,56 _{with different legislation}

provided for different types of transactions, as will be seen below. The first Act passed by the Parliament of the Union of South Africa was the Usury Act of 1926,57

which applied only to moneylending transactions.58 _{This act provided a sliding scale}

of interest rates which depended upon the size of the loan.59 _{Loans of less than 10}

pounds attracted a maximum of 30% interest per year; at the top of the scale, loans exceeding 50 pounds attracted a maximum of 12% interest per year. Any person contravening these provisions was guilty of an offence and liable to a fine not exceeding 100 pounds.60 All moneylending transactions had to be in writing and

56 _{SALC Working Paper 46 at 24.}

57 _{Act 37 of 1926. This Act did not in fact provide complete uniformity throughout the Union. The Cape}

Usury Act and Chapter 98 of the Orange Free State Law Book were repealed by Section 15(10), but Section 1 of Act 6 of 1858 (Natal) was only partially amended by Section 15(2). The Natal Act was subsequently repealed by the Pre-Union Statute Law Revision Act 78 of 1967.

58 _{In effect, instalment transactions relating to movables were not statutorily regulated until the passing}

of the Hire-Purchase Act 36 of 1942, from which date the Usury Act and the Hire-Purchase Act co- existed without impacting on each other at all, because they applied to different types of contracts.

59 _{Section 1(1).} 60 _{Section 1(2).}

contain certain prescribed information.61 _{Provision was made for certain permissible}

expenses other than interest.62

In March 1967, the Minister of Finance appointed a committee under the chairmanship of Dr DG Franzsen to investigate and improve the 1926 Usury Act. Within a few months of the Franzsen Committee completing its report, the Limitation

and Disclosure of Finance Charges Act63 _{was passed, which repealed the 1926}

Usury Act, and later became the Usury Act 73 of 1968.64 _{The long title of the Act}

described its purpose:

“To provide for the limitation and disclosure of finance charges levied in respect of moneylending transactions, credit transactions and leasing transactions and for matters incidental thereto; and to repeal the Usury Act, 1926.”

The Usury Act of 1968 did not set fixed rates for transactions falling within its ambit, but provided for maximum interest rates in moneylending, leasing and credit transactions. It was characterised by repeated references to notices promulgated by the Minister of Trade and Industry.65 Thus, maximum rates for different sizes of transactions were not set out in the Act itself, but were all changed fairly frequently from time to time by promulgation by the Minister.66 _{Failure to comply with the Act}

was a criminal offence.67 _{A moneylender commits the statutory offence of “usury”}

where he “stipulates or demands or receives” finance charges68 _{at a rate in excess of}

that prescribed by the Act.69

As in the case of most consumer credit laws, the Usury Act restricted many of the traditional rights and powers of creditors and increased the remedies available to

62 _{Section 2(1). These included stamp costs, mortgage costs, rates and taxes, licence fees, insurance}

premiums (in certain cases) and “any costs which have actually been incurred by the lender in the recovery of his debt.”

63 _{Act 73 of 1968.}

64 _{The Act was renamed in terms of s9 of the Limitation and Disclosure of Finance Charges Act 42 of}

1986.

65 _{Prior to 1993, the relevant Minister was the Minister of Finance; see the Usury Amendment Act 30 of}

1993, section 1.

66 _{The most recent promulgation of interest rates in terms of the Usury Act, for example, provided for a}

maximum interest rate of 20% per annum for loans less than R10 000, and 17% per annum for loans greater than R10 000 (GN 1100, Government Gazette 26809, 17 September 2004). These rates will be valid until 1 June 2007, when the relevant provisions of the National Credit Act come into operation.

67 _{Section 17.}

68 _{The concept of “finance charges” – as contained in the Usury Act – does not convey the same}

meaning as that of “interest rate”, but entails more. According to Grové and Otto Basic Principles of Consumer Credit Law (2002) 66, the term “finance charges” theoretically encompasses all charges charged by a moneylender where a loan is extended.

debtors.70 _{In spite of its consumer protection orientation, however, the Act was}

unfortunately an example of highly complex and verbose legislative drafting.

Otto and Grové point out71 _{that with the passing of the Sale of Land on Instalments}

Act in 1971,72 _{a pattern of “second-generation legislation” was established, namely:} • an act for the financial aspects of moneylending transactions and instalment

transactions relating to movables;73

• an act for the contractual aspects of instalment transactions relating to movables;74 _and

• an act for the purchase of land on instalments.75

This pattern was to continue to apply to consumer credit law in South Africa until 2006.76

This legislation was, however, of an ad hoc nature, and there was no evidence of the legislature attempting to harmonise these laws with one another.77 _{Whilst the history}

of the development of consumer credit legislation in South Africa is similar to that of other countries, in many respects South African legislation was more fragmented than other modern jurisdictions.78