In a recent press release, the National Credit Regulator (NCR) announced that the North Gauteng High Court ordered Barko Financial Services (Pty) Ltd to refund customers a service provider fee for processing payments which when added to the service fee under the consumer’s credit agreement, is more than R50. According to the National Credit Act (NCA) R50 is the prescribed maximum service fee that consumers may be charged.
This court ruling comes after the National Consumer Tribunal ordered Barko to stop charging users the additional service fee for processing payments in 2011, following the NCR issuing a Compliance Notice against Barko.
The service provider fee collected by Barko from consumers is charged for processing payments by Nupay Solutions (Pty) Ltd on credit agreements between Barko and consumers. The Tribunal found that Barko indirectly encouraged consumers to enter into an agreement which requires them to pay a service provider fee for processing payments to Nupay Solutions. Approximately 90% of Barko’s client repayments went through Nupay for which the consumer paid a fee. This fee was in addition to the service provider fee the consumer was already paying to Barko in terms of their loan agreement.
In its judgment, the Tribunal stated that the service fee is for the processing of the consumer’s payment obligation and as such forms part of the administration cost of the credit agreement. Barko was therefore ordered to reimburse its customers the portion of the service provider fee paid which exceeded R50 and to discontinue charging customers a fee for processing payments, if when added to the service fee in the customer’s credit agreement, is more than R50.
Following the Tribunal, Barko took the matter on appeal to the North Gauteng High Court who dismissed their appeal with costs. The High Court judgment confirmed the Tribunal ruling and found that the NCA does not make provision for the consumer to pay an additional fee in excess of the maximum prescribed service fee.
At Compuscan, we understand the implications that this judgment holds for the credit industry and for our clients and as such we will attempt to bring you the latest developments and news in this regard.