Regulator targets Capfin

The National Credit Regulator appears to be sharpening its teeth for unsecured lenders soon after African Bank was rescued by the Reserve Bank and six other financial institutions.

The regulator confirmed yesterday that it had issued a compliance notice to Southern View Finance UK Limited, trading as Capfin, for breaching the National Credit Act 34 of 2005 (NCA).

Capfin grants "fast easy cash" loans of up to R10000 at Pep Stores and Ackermans outlets.

NCR investigations found that:

• Capfin does not obtain and verify proof of consumers' income or require them to provide supporting information or documentation in respect of income verification;
• Capfin's advertisements for credit mislead and/or deceive consumers into believing that income verification and supporting documentation are not requirements for affordability assessments; and
• It does not maintain and keep records of documentation in support of affordability assessments.

The notice issued by NCR requires Capfin to submit an audit report that confirms that the company has implemented systems and procedures to comply with the NCA in respect of these issues.

Capfin legal and compliance manager Marthie Horn said the company had received the notice and took the NCA "seriously and respects [its] authority".

"Capfin is confident that its processes and procedures comply fully with the provisions of the NCA, the regulations issued in terms of the NCA and the affordability assessment guidelines, and is comfortable that it will be able to address the NCR's concerns in this regard.

"Capfin will ... carefully consider the compliance notice issued by the NCR and, in due course, take the necessary and appropriate steps," said Horn.

The notice issued by the NCR comes less than a week after another unsecured lender, Capitec, was downgraded by ratings agency Moody's.

Moody's also downgraded South Africa's four biggest banks - Absa, First National Bank, Standard Bank and Nedbank.

Moody's said the banks were downgraded because it believed it was now less likely that the authorities would step in and protect all the banks' creditors.

African Bank was put under curatorship last week and, as part of a R10-billion deal, bond-holders and large depositors were required to stomach a loss of up to 10%.

The rating agency said this "indicates the Reserve Bank's willingness to impose losses on creditors".