Net1 moneylender headed for court
Moneyline counters accusations of reckless lending to social grant beneficiaries
In about a month, money lenders Moneyline will oppose an application by the National Credit Regulator(NCR) to cancel its registration for alleged reckless lending to social grant beneficiaries.
Moneyline Financial Services is the Net1 company responsible for loans. Another Net1 company, Cash Paymaster Services(CPS), distributes over 17 million social grants on behalf of the state. Net1 and its subsidiary companies have been at the centre of controversies surrounding the social grant payments. Net1 has also repeatedly been accused of using its favourable position as the payer of social grants to aggressively market high interest loans and other products to grant recipients, accusations which the company has denied.
National Credit Regulator spokesperson Lebogang Selibi said the NCR had asked the National Consumer Tribunal in 2014 to cancel the registration of Moneyline on the basis that it included child and foster child grants in affordability assessments of customers, in contravention of the National Credit Act.
The Tribunal heard arguments on 27 November 2015 from the NCR and Moneyline.
Moneyline argued a technical point that NCR’s investigation was not in accordance with the Act and that the NCR’s report was inadmissible evidence.
But the NCR’s senior legal advisor Nthupang Magolego argued that the investigation into Moneyline’s lending practices was authorised, based on “reasonable suspicion”.
On 11 March 2016, the Tribunal ruled that the complaint was valid and that there were “good reasons” to investigate Moneyline. The ruling by the three Tribunal members was not unanimous.
Net1 on Wednesday confirmed to GroundUp that Moneyline would appeal this decision in the North Gauteng High Court in December. “Should Moneyline be successful in its appeal it will dispense with the NCR’s application. If, however, the appeal is unsuccessful the merits of the NCR application will then be dealt with,” Net1 said.
Net1 has warned shareholders that a ban on its moneylending business could affect its results. “If the NCR’s application initial is successful, Moneyline would be prohibited from operating its microlending business, which could have a material adverse effect on our results of operations and cash flows,” the company said in its latest annual report.
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